Word: steinhardt
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WHEN IT COMES TO LEISURE, Michael Steinhardt speaks a language all his own. In 1978 he was determined to escape the stress of his hedge-fund management job and took a year's sabbatical from Wall Street. However, he used that time to start a real-estate and construction business in Israel. Steinhardt's notion of a vacation, he admits, is "screaming into an antiquated telephone, trying to find out what's going on." Time off hasn't always been fruitful. In 1994, after a rare three-week vacation in China, Steinhardt returned to New York to find that...
...investors were stunned last week when Steinhardt, 54, announced that he was winding down the four high-performing hedge funds he has guided almost flawlessly for 28 years. Wall Street struggled to imagine what his definition of retirement might be. Not one to disappoint, the financial whiz explained that although he is an atheist, he hopes to infuse American society with secular Jewish values...
That kind of counterintuition has served Steinhardt well over the years. His funds produced an average annual return of 24%, netting him a personal fortune of $400 million and providing his investors, whose assets total $2.6 billion, with huge profits. Unlike mutual funds, which handle investments of varying sizes from an unlimited number of clients, hedge funds are private limited partnerships of no more than 99 investors, usually with a minimum stake of $1 million. As such, they are not subject to the same regulations imposed on mutual funds by the Securities and Exchange Commission. By selling short securities whose...
...have performed as consistently as Steinhardt, a jeweler's son from Brooklyn whose first shares of stock were a bar mitzvah present from his father. He broke into Wall Street as a research analyst but, by the age of 26, had started his own firm and kicked off his winning streak. One dollar invested with Steinhardt in 1967, the year he founded his firm, would be worth $462 today. That compares with a $17 value today for a dollar invested the same year in the stocks listed in the Standard & Poor's 500. Richard Cooper, an investor who entrusted...
Well, almost every investor. Last year Steinhardt hit a speed bump, as did most other big hedge funds like George Soros' Quantum Group and Julian Robertson's Tiger Management. Neither however, suffered as badly as Steinhardt's funds, which lost 29% of their value during 1994, owing largely to the plummeting price of European bonds, in which Steinhardt had invested heavily. Says he: "I made a vast amount of money in 1993 on the same bet. Nevertheless, the pain in 1994 was far greater than the pleasure...