Michael Steinhardt
Encyclopedia
Michael H. Steinhardt is an American investor and philanthropist active in Jewish causes. He was one of the first prominent hedge fund
managers, and is a graduate of the Wharton School of the University of Pennsylvania
. He founded Steinhardt, Fine, Berkowitz & Co., a hedge fund, in 1967. He is "a legend in the story of hedge funds, partly because of his success as a trader but also because of his personality."
Index over the same timeframe.
Prior to Steinhardt's and his partners' starting their eponymous hedge fund during the summer of 1967, Steinhardt was an analyst at Loeb, Rhoades & Co.
, later part of Citigroup
, following a convoluted chain of mergers and spinoffs. At Loeb Rhodes, Steinhardt followed the conglomerate
industry, which included companies such as Automatic Sprinkler (now defunct), City Investing (also defunct), and the best-known conglomerate of its day, Gulf & Western (now part of Viacom
and Viacom's spinoff CBS). Again, according to his autobiography, he met his future wife in a car pool he organized in early 1967. During the course of the drive to downtown NYC, he mentioned the name of a company, Colorado Milling, a leading operator of grain elevators. Colorado Milling was acquired in 1968 by Great Western Sugar, a beet sugar refiner turned conglomerate, which had previously acquired Shakey's, a major pizza chain. The merged company was renamed Great Western United. The future Mrs. Steinhardt, who didn't know Michael Steinhardt at the time, mentioned Colorado Milling to her father, who invested in the company, making a substantial profit, part of which was used to buy his daughter—the future Mrs. Michael Steinhardt—her first fur coat.
After decades of successfully managing the fund, Steinhardt and his firm were investigated for allegedly trying to manipulate the short-term Treasury Note market in the early 1990s. He personally paid 75% of a total fine of $70 million as part of settlement with the U.S. Securities and Exchange Commission and Department of Justice
. His firm made $600 million on the Treasury positions. In "No Bull," Steinhardt said he did nothing wrong, but merely settled the case in order to "move on." Following a negative performance in his hedge fund in 1994, Steinhardt Partners enjoyed an excellent 1995, with performance in line with its historical record. The hedge fund closed and distributed all monies to its limited partners at the end of 1995, leaving Steinhardt himself very wealthy and very liquid.
In 2004, Steinhardt came out of retirement to work for Index Development Partners, Inc., now known as WisdomTree Investments. He is chairman of WisdomTree, which offers dividend and earnings-based index funds rather than traditional index funds based on market capitalization
. As of April, 2011, WisdomTree had $13.5 billion under management, including over $11 billion in ETFs, and is growing by 10% a month. During the fall of 2007 and 2008, Wisdom Tree's growth stagnated, as the stock market, especially the financial sector, in which Wisdom Tree's dividend-based funds are overweighted, tanked, as did Wisdomtree's stock. However, in recent months, as the Wisdom Tree funds tended to outperform their "bogies," asset growth resumed its earlier pace and its stock price appreciated accordingly. In 2010, Steinhardt was hired by IDT Corporation to serve as Chairman of the Board of Israel Energy Initiatives Ltd (IEI), Genie’s Israel-based alternative energy
affiliate.
included some pieces owned by him. He also sits on the American advisory board of Christie's
, the art & antiques auction house.
, donating over $125 million to Jewish causes. He and Charles Bronfman
founded Taglit-Birthright Israel
, which has to date sent over 220,000 young Jews aged 18–26 on a 10-day trip to Israel, absolutely free. In his autobiography, he identifies himself as an atheist who nonetheless strongly supports cultural Jewish identity.
In the 1990s, Steinhardt gave Steeple Jason Island
and Grand Jason Island
in the Falkland archipelago
to the Wildlife Conservation Society
(WCS), along with US$425,000, and a guarantee to name the conservation statement after himself and his wife.
The Steinhardt School of Culture, Education and Human Development at New York University
bears his name in recognition of two $10 million donations.
Steinhardt is also chairman of the board at The Steinhardt Foundation for Jewish life (formerly Jewish Life Network
) and Taglit-Birthright Israel
, He also makes public appearances, speaking with young Jewish kid through organizations such as Ezra USA. Ezra USA is the largest youth movement for Russian-speaking Jews in the US and RAJE(Russian American Jewish Experience).
, a prison in upstate NY near the Canadian border, but had his sentence reduced to time served after two years due to allegations of prosecutorial misconduct.) Regarded by D.A. Frank Hogan as the number one jewelry fence in New York, "Red," according to No Bull, was an associate of noted underworld figures such as Meyer Lansky
, Vincent "Jimmy Blue Eyes" Alo (incorrectly named "Aiello" in No Bull), and Albert Anastasia
(No Bull wrongly refers to him as "Joey".) In No Bull, Steinhardt describes how his father bankrolled his early forays into the stock market by giving him envelopes stuffed with $10,000 in cash and sometimes much more than that. The book also suggests that Steinhardt's education at the Wharton School may have been paid for with illicit funds.
and a board member of the Foundation for the Defense of Democracies, to which he donated $250,000 in 2002. According to Newsmeat.com, a tracker of publicly-available campaign contributions, in the 2000 New York senatorial primary, he donated $1,000 (then the maximum allowable under law) to Republican Rudy Giuliani
. When Mayor Giuliani dropped out of the race, Steinhardt contributed an equal amount to Giuliani's successor, Rick Lazio
. Steinhardt also gave $1,000 to Lazio in the general election.
In 2001, Steinhardt, along with several other investors including Conrad Black
, founded the New York Sun
, a niche New York City broadsheet best known for its unflinching pro-Israel support and generally (but not invariably) neo-conservative outlook. Steinhardt wrote a letter to President Clinton advocating the pardon of Marc Rich
, calling him "my friend...who has been punished enough" (on January 20, 2001, Clinton's last day in office, Rich was in fact pardoned.) Steinhardt was an early promoter of the possible presidential candidacy of Michael Bloomberg
in 2008.
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
managers, and is a graduate of the Wharton School of the University of Pennsylvania
University of Pennsylvania
The University of Pennsylvania is a private, Ivy League university located in Philadelphia, Pennsylvania, United States. Penn is the fourth-oldest institution of higher education in the United States,Penn is the fourth-oldest using the founding dates claimed by each institution...
. He founded Steinhardt, Fine, Berkowitz & Co., a hedge fund, in 1967. He is "a legend in the story of hedge funds, partly because of his success as a trader but also because of his personality."
Career in investing
Steinhardt averaged an annualized return for his clients of 24.5%, after a 1% management fee and a "performance fee" of 15% (early in his career, later 20%) of all annual gains, realized and unrealized, nearly triple the annualized performance of the S&P 500S&P 500
The S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock...
Index over the same timeframe.
Prior to Steinhardt's and his partners' starting their eponymous hedge fund during the summer of 1967, Steinhardt was an analyst at Loeb, Rhoades & Co.
Loeb, Rhoades & Co.
Loeb, Rhoades & Co. was a Wall Street brokerage firm founded in 1931 and acquired in 1979 by Sanford I. Weill's Shearson Hayden Stone. Although the firm would operate as Shearson Loeb Rhoades for two years, the firm would ultimately be acquired in 1981 by American Express to form Shearson/American...
, later part of Citigroup
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...
, following a convoluted chain of mergers and spinoffs. At Loeb Rhodes, Steinhardt followed the conglomerate
Conglomerate (company)
A conglomerate is a combination of two or more corporations engaged in entirely different businesses that fall under one corporate structure , usually involving a parent company and several subsidiaries. Often, a conglomerate is a multi-industry company...
industry, which included companies such as Automatic Sprinkler (now defunct), City Investing (also defunct), and the best-known conglomerate of its day, Gulf & Western (now part of Viacom
Viacom
Viacom Inc. , short for "Video & Audio Communications", is an American media conglomerate with interests primarily in, but not limited to, cinema and cable television...
and Viacom's spinoff CBS). Again, according to his autobiography, he met his future wife in a car pool he organized in early 1967. During the course of the drive to downtown NYC, he mentioned the name of a company, Colorado Milling, a leading operator of grain elevators. Colorado Milling was acquired in 1968 by Great Western Sugar, a beet sugar refiner turned conglomerate, which had previously acquired Shakey's, a major pizza chain. The merged company was renamed Great Western United. The future Mrs. Steinhardt, who didn't know Michael Steinhardt at the time, mentioned Colorado Milling to her father, who invested in the company, making a substantial profit, part of which was used to buy his daughter—the future Mrs. Michael Steinhardt—her first fur coat.
After decades of successfully managing the fund, Steinhardt and his firm were investigated for allegedly trying to manipulate the short-term Treasury Note market in the early 1990s. He personally paid 75% of a total fine of $70 million as part of settlement with the U.S. Securities and Exchange Commission and Department of Justice
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
. His firm made $600 million on the Treasury positions. In "No Bull," Steinhardt said he did nothing wrong, but merely settled the case in order to "move on." Following a negative performance in his hedge fund in 1994, Steinhardt Partners enjoyed an excellent 1995, with performance in line with its historical record. The hedge fund closed and distributed all monies to its limited partners at the end of 1995, leaving Steinhardt himself very wealthy and very liquid.
In 2004, Steinhardt came out of retirement to work for Index Development Partners, Inc., now known as WisdomTree Investments. He is chairman of WisdomTree, which offers dividend and earnings-based index funds rather than traditional index funds based on market capitalization
Market capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded company...
. As of April, 2011, WisdomTree had $13.5 billion under management, including over $11 billion in ETFs, and is growing by 10% a month. During the fall of 2007 and 2008, Wisdom Tree's growth stagnated, as the stock market, especially the financial sector, in which Wisdom Tree's dividend-based funds are overweighted, tanked, as did Wisdomtree's stock. However, in recent months, as the Wisdom Tree funds tended to outperform their "bogies," asset growth resumed its earlier pace and its stock price appreciated accordingly. In 2010, Steinhardt was hired by IDT Corporation to serve as Chairman of the Board of Israel Energy Initiatives Ltd (IEI), Genie’s Israel-based alternative energy
Alternative energy
Alternative energy is an umbrella term that refers to any source of usable energy intended to replace fuel sources without the undesired consequences of the replaced fuels....
affiliate.
Art collection
Steinhardt is an art collector, especially of antiquities. A special exhibition, "Ancient Art of the Cyclades," held at the Katonah Museum of ArtKatonah Museum of Art
The Katonah Museum of Art is a non-collecting institution geared towards visual arts, located in Katonah, New York. The museum presents changing exhibitions that cross a spectrum of artistic disciplines, cultures, and historical periods. With each exhibition, artists, curators, and other...
included some pieces owned by him. He also sits on the American advisory board of Christie's
Christie's
Christie's is an art business and a fine arts auction house.- History :The official company literature states that founder James Christie conducted the first sale in London, England, on 5 December 1766, and the earliest auction catalogue the company retains is from December 1766...
, the art & antiques auction house.
Philanthropy
Steinhardt has been an active philanthropistPhilanthropy
Philanthropy etymologically means "the love of humanity"—love in the sense of caring for, nourishing, developing, or enhancing; humanity in the sense of "what it is to be human," or "human potential." In modern practical terms, it is "private initiatives for public good, focusing on quality of...
, donating over $125 million to Jewish causes. He and Charles Bronfman
Charles Bronfman
Charles Rosner Bronfman, is a Canadian businessman and philanthropist. With an estimated net worth of $US 2.0 billion , Bronfman was ranked by Forbes as the 15th wealthiest Canadian and 595th in the world....
founded Taglit-Birthright Israel
Birthright Israel
Taglit-Birthright Israel is a Jewish Israeli registered charity that sponsors free 10-day heritage trips to Israel. Birthright Israel's goals are to diminish the division between Israel and Jewish communities around the world and to strengthen participants' personal Jewish identity and...
, which has to date sent over 220,000 young Jews aged 18–26 on a 10-day trip to Israel, absolutely free. In his autobiography, he identifies himself as an atheist who nonetheless strongly supports cultural Jewish identity.
In the 1990s, Steinhardt gave Steeple Jason Island
Steeple Jason Island
Steeple Jason Island is a small island located at , west of the Grand Jason Island. It is a part of the Jason Islands in the Falkland Islands. Along with Grand Jason it is one of the "Islas los Salvajes" in Spanish .-Population and geography:None of the Jason Islands has ever been properly inhabited...
and Grand Jason Island
Grand Jason Island
Grand Jason Island is a small island located at , east of the Steeple Jason Island. It is a part of the Jason Islands in the Falkland Islands, and along with Steeple Jason it is one of the "Islas los Salvajes" in Spanish .-Wildlife:Grand Jason is a home to one of the largest colonies of...
in the Falkland archipelago
Falkland Islands
The Falkland Islands are an archipelago in the South Atlantic Ocean, located about from the coast of mainland South America. The archipelago consists of East Falkland, West Falkland and 776 lesser islands. The capital, Stanley, is on East Falkland...
to the Wildlife Conservation Society
Wildlife Conservation Society
The Wildlife Conservation Society based at the Bronx Zoo was founded in 1895 as the New York Zoological Society and currently manages some of wild places around the world, with over 500 field conservation projects in 60 countries, and 200 scientists on staff...
(WCS), along with US$425,000, and a guarantee to name the conservation statement after himself and his wife.
The Steinhardt School of Culture, Education and Human Development at New York University
New York University
New York University is a private, nonsectarian research university based in New York City. NYU's main campus is situated in the Greenwich Village section of Manhattan...
bears his name in recognition of two $10 million donations.
Steinhardt is also chairman of the board at The Steinhardt Foundation for Jewish life (formerly Jewish Life Network
Jewish Life Network
The Steinhardt Foundation for Jewish Life is a New York based non-profit foundation, which funds projects and programs aimed at improving Jewish education and identity....
) and Taglit-Birthright Israel
Birthright Israel
Taglit-Birthright Israel is a Jewish Israeli registered charity that sponsors free 10-day heritage trips to Israel. Birthright Israel's goals are to diminish the division between Israel and Jewish communities around the world and to strengthen participants' personal Jewish identity and...
, He also makes public appearances, speaking with young Jewish kid through organizations such as Ezra USA. Ezra USA is the largest youth movement for Russian-speaking Jews in the US and RAJE(Russian American Jewish Experience).
No Bull
In 2001, Steinhardt published an autobiography: "No Bull: My Life in and out of Markets". In this book, he addressed for the first time the question of his father, Sol Frank Steinhardt, who also went by the moniker "Red McGee." "Red" Steinhardt was convicted in 1958 on two counts of buying and selling stolen jewelry, and was sentenced to serve two 5-to-10 year terms, to run consecutively, in the New York State prison system. (He did most of his time at DannemoraClinton Correctional Facility
Clinton Correctional Facility is a New York State Department of Correctional Services state prison for men located in the Village of Dannemora, New York. The prison itself is sometimes colloquially referred to as Dannemora, although its actual name is derived from its location in Clinton County,...
, a prison in upstate NY near the Canadian border, but had his sentence reduced to time served after two years due to allegations of prosecutorial misconduct.) Regarded by D.A. Frank Hogan as the number one jewelry fence in New York, "Red," according to No Bull, was an associate of noted underworld figures such as Meyer Lansky
Meyer Lansky
Meyer Lansky , known as the "Mob's Accountant", was a Polish-born American organized crime figure who, along with his associate Charles "Lucky" Luciano, was instrumental in the development of the "National Crime Syndicate" in the United States...
, Vincent "Jimmy Blue Eyes" Alo (incorrectly named "Aiello" in No Bull), and Albert Anastasia
Albert Anastasia
Albert Anastasia was boss of what is now called the Gambino crime family, one of New York City's Five Families, from 1951-1957. He also ran a gang of contract killers called Murder Inc. which enforced the decisions of the Commission, the ruling council of the American Mafia...
(No Bull wrongly refers to him as "Joey".) In No Bull, Steinhardt describes how his father bankrolled his early forays into the stock market by giving him envelopes stuffed with $10,000 in cash and sometimes much more than that. The book also suggests that Steinhardt's education at the Wharton School may have been paid for with illicit funds.
Political activism
Steinhardt is active in political circles ranging from centrist Democratic to neo-conservative, having been a past chairman of the Democratic Leadership CouncilDemocratic Leadership Council
The Democratic Leadership Council was a non-profit 501 corporation that, upon its formation, argued the United States Democratic Party should shift away from the leftward turn it took in the late 1960s, 1970s, and 1980s...
and a board member of the Foundation for the Defense of Democracies, to which he donated $250,000 in 2002. According to Newsmeat.com, a tracker of publicly-available campaign contributions, in the 2000 New York senatorial primary, he donated $1,000 (then the maximum allowable under law) to Republican Rudy Giuliani
Rudy Giuliani
Rudolph William Louis "Rudy" Giuliani KBE is an American lawyer, businessman, and politician from New York. He served as Mayor of New York City from 1994 to 2001....
. When Mayor Giuliani dropped out of the race, Steinhardt contributed an equal amount to Giuliani's successor, Rick Lazio
Rick Lazio
Enrico Anthony "Rick" Lazio is a former U.S. Representative from the state of New York. Lazio became well known nationally when he ran against Hillary Rodham Clinton for the U.S. Senate in New York's 2000 Senate election...
. Steinhardt also gave $1,000 to Lazio in the general election.
In 2001, Steinhardt, along with several other investors including Conrad Black
Conrad Black
Conrad Moffat Black, Baron Black of Crossharbour, OC, KCSG, PC is a Canadian-born member of the British House of Lords, and a historian, columnist and publisher, who was for a time the third largest newspaper magnate in the world. Lord Black controlled Hollinger International, Inc...
, founded the New York Sun
New York Sun
The New York Sun was a weekday daily newspaper published in New York City from 2002 to 2008. When it debuted on April 16, 2002, adopting the name, motto, and masthead of an otherwise unrelated earlier New York paper, The Sun , it became the first general-interest broadsheet newspaper to be started...
, a niche New York City broadsheet best known for its unflinching pro-Israel support and generally (but not invariably) neo-conservative outlook. Steinhardt wrote a letter to President Clinton advocating the pardon of Marc Rich
Marc Rich
Marc Rich is an international commodities trader and entrepreneur. He is best known for founding the commodities company Glencore. He was indicted in the United States on federal charges of illegally making oil deals with Iran during the late 1970s-early 1980s Iran hostage crisis and tax evasion...
, calling him "my friend...who has been punished enough" (on January 20, 2001, Clinton's last day in office, Rich was in fact pardoned.) Steinhardt was an early promoter of the possible presidential candidacy of Michael Bloomberg
Michael Bloomberg
Michael Rubens Bloomberg is the current Mayor of New York City. With a net worth of $19.5 billion in 2011, he is also the 12th-richest person in the United States...
in 2008.