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The Billionaire Financiers

In spite of the economic crisis, almost half of the 45 new entrants on the Forbes list of the 400 richest Americans, have made their fortunes in Hedge Funds and Private Equity. Next Finance carries out a survey on them

Article also available in : English EN | français FR

Matthew Miller, the editor of the Forbes Rich List, declared "Wall Street has led the charge this year". In his list of the richest men in the world in 2008, most of the billionaires listed are financiers.

Holding top honour : Warren Buffett is the richest man in the world according to the last Fobes census. With an estimated fortune of 62 billion dollars, he is ahead of the Mexican Carlos Slim Helu and Bill Gates, the famous CEO of Microsoft.

Abigail Johnson is the richest woman in finance. Her fortune is estimated at 15 billion dollars. She is the director of the famous pension fund "Fidelity", the largest retirement fund in the United States with 1600 billion dollars worth of managed assets. "Abby" who studied Art and History, obtained an MBA at Harvard, inherited a 24% stake of the business which her father joined in 1957. Today her family still controls 49% of the capital of Fidelity. The father in question is none other than Edward Johnson III, 77 years old, who joined Fidelity Management and Research, the firm founded by his father (Abigail’s grandfather) in 1957 before becoming the firm’s President in 1972. He himself is worth 10 billion dollars.

Carl Icahn, Number 46, is worth 14 billion dollars. The holder of a Diploma in Philosophy from the University of Princeton, he made his name by buyouts and restructuring of troubled companies. In the 80s, the story surrounding Texaco and USX secured his reputation. He became famous by putting the world’s number one name in entertainment and media, Time Warner, and more recently Motorola under pressure

Michael Bloomberg Number 65 with an estimated fortune of 11.5 billion dolloars. 66 years old, he has an engineering degree from John Hopkins University and is a Harvard MBA graduate; in the 70s, he was an equity trader at Solomon Brothers which he left with 10 million dollars’ worth of shares after a merger. He created his own company in 1981 selling financial data services and analysis tools to Wall Street. Three years later he added financial information systems aimed at competing with Reuters and Dow Jones. According to Forbes, he would consider selling 68% of shares which he still holds (Merryl Lynch and private investors hold 32%).

Ronald Perelman, 65 years old, is number 87 with 9,5 billion dollars. Holding an MBA from Wharton School of Business, he left his father’s merger aquitstion business when he was in his thirties. He initiated the purchase of shares to the value of 1,9 million dollars from a jewellery distributer Cohen-Hatfield in 1978 which he later sold to Sam Walton (Amercan billionaire and founder of Walmart shops). He then threw himself into a series of buyouts. He bought out Revlon in 1985 and resold Bancorp to Citigroup for 6 billion dollars in 2002

George Soros, aged 77, worth 9 billion dollars. The billionaire who made his fortune in Hedge Funds is the 97th richest man in the world. He made himself famous for " the demise of Sterling" "the man who broke the Bank of England" in 1992 in an operation which made him 1 billion dollars in profit.

Steven Cohen 52 years old, number 137 on the list, made his fortune of 6,8 billion dollars in Hedge Funds. Holding a Diploma from Wharton, he started as an options trader and created his Hedge Fund SAC Capital in 1992 with 25 million dollars of managed assets. Today he manages more than 14 billion dollars for nine funds. He has been making a 34% rate of return on investments in management fees since 1992

Stephen Schwarzman, aged 61, classified as the 145th richest man worth 6,5 billion dollars.
Last June Peter Peterson, Hamilton James and Scwarzman listed the Blackstone fund on the stock exchange. Just after its listing, Schwarzman was worth another 10 billion dollars. Between June and the publication of the Fobes listing, the value of Blackstone dropped sharply. Blackstone administers 100 billion dollars distributed between private equity, real estate and operation of hedge funds.

Graduate Harvard and of Yale (alongside George Bush) and managing director of Lehman Brothers at 31 years old in 1978, Schwarzman co-founded Blackstone with Peterson in 1985 with just 400 000 dollars. 21 years later in 2006 Blackstone made 2,3 billion dollars profit. In July 2007, Blackstone bought out Hilton Hotels for 26 billion dollars.

Peter Peterson, 81 years old, worth 2 billion had been Secretary of Commerce under President Nixon, and CEO of Lehman brothers in 1973. He was to retire in 2008.

Hamilton James (56) is number 785 on the list and is worth 1,5 billion . President and Number 2 at Blackstone, he is set to succeed Schwarzman.

Henry Kravis, co-founder of the famous private Equity firm KKR is the 178th richest at 64 years old worth 5.5 billion dollars. George Roberts, the "R" in KKR, has an equal worth of 5,5 billion dollars whilst Jerome Kohlbert, the second"K" in KKR, is worth 1,5 billion dollars and has retired from the firm.

James Simons the 178th on the list, has a fortune estimated at 5,5, billion dollars. He is the founder, in 1982, of the famous fund Renaissance Technologies. He has a diploma from MIT and a PHD from Berkeley. He prefers to employ people with PHDs rather than those with MBAs. He worked for the Department of Defense, then taught Maths. An investments of 2,5 million dollars in his fund in 1990, is worth 1 billion dollars today!

Leon Black, 260th richest, worth 4 billion dollars at the age of 57. A Dartmouth Philosophy and History graduate and holder of an MBA Degree from Harvard. He worked at Drexel Lambert in the 80s before starting Apollo Management following the collapse of Drexel in 1990. He resold 18% of his Apollo Management shares for 1,2 billion dollars in 2007. He is the owner of one of the most renowned art collections in the United States.

Daniel Och is number 296 on the Forbes list. At 47 years old, he is worth 3,6 billion dollars. A Wharton graduate, he started his career with Goldman Sachs in arbitrage. He worked with billionaires Edward Lampert and Richard Perry, then on behalf of the Ziff brothers he started Och-Ziff with an initial investment of 100 million dollars. Today, Och-Ziff administers 33 billion dollars worth of assets and the firm was listed on the Stock Exchange in November 2007. Och made 520 million dollars according to the New York Times.

Stanley Druckenmiller 307th richest man in the world is worth 3,5 billion dollars. He founded Duquesne Capital Management in 1981. He became the intermediary financier for Georges Soros in 1988 and would have been the orchestrater of the famous speculation operation involving the pound sterling which generated a billion dollar profit. He separated from Georges Soros in 2000.

Bruce Kovner, is 307th on the list with a worth of 3,5 billion dollars. He founded Caxton and Associates in 1983. His fund made a net return of 25% annually since this date. He manages more than 15 billion dollars’ worth of assets. He has recently acquired seaside properties in the Santa Barbara region for 70 million dollars.

David Bonderman, 334th on the list, with a worth of 3,3 billion. He is 65 years old. Studied at the George Washington university and has a doctorate in Law from Harvard. Co founder with James Coulter of the business of Private Equity Texas Pacific Group. Together with KKR and Goldman Sachs he bought up the electricity company TXU for 45 billion dollars in 2007. He speaks several languages. He brought the Rolling Stones to Las Vegas for his 60th birthday in 2002

T Boone Pickens worth 3 billion. Originally from Oklahoma, he studied geology and obtained his diploma in 1951. He worked for three years for Philips Petroleum and began his own business in 1956 which he has sold. He then made a name for himself in the hostile buyout attempts in the Gulf, Philips, Unocal... His Hedge fund BP Capital made 1 billion dollars profit in 2006 by investing in petrol and gas.

Romain Zaleski 75 years old, French, the 428th richest man with a worth of 2,7 billion dollars. In the 80s he rescued the Italian company Carlo Tassara which speciaised in steel. He began to invest in Italian and French companies whose business was steel and energy. He played a major role in the merger of Arcelor Mittal in 2006.

David Gottesman, 81 years old, is the 428th richest man with a worth of 2,7 billion dollars. Friend of Warren Buffet since 1962, he was one of the first investors in Berkshire Hathaway and owns 10 00 shares worth 1,4 billion dollars. He founded an Investment Advisory firm in Manhattan in 1964. Today the assets administered exceed 14 billion dollars. He rejoined the Board of Directors of Berkshire Hathaway in 2003.

Mike Milken, 462nd richest man and inventor of the Junk Bonds, is worth 2,5 billion dollars at 61 years of age. He financed the large operations of merger acquisitions in the 80s at the height of his power. Milken is known for having received 550 million dollars in salaries and bonuses in 1986. He payed 900 million dollars in fines after having been sentenced to 10 years in prison for market fraud - sentence later reduced to 22 months

David Rubenstein, 58 years old, 462nd richest man with a 2,5 billion dollar fortune acquired in the LBO. He founded the Carlyle Group in 1987 together with William Conway Jr and Daniel D’Aniello. Shrewd, the founders of Carlyle used advisors well ensconced in political circles, such as George Bush Sr or John Major to buyout businesses specialising in Defence which they then restructured and made large profits. Michael Moore violently attaked Carlyle for having invested money in the Bin Laden family

Carlyle today has diversified its portfolio and is working at cleaning up its image by bringing on board managers such as the ex-boss of IBM, Lou Gerstner Jr. The latest recruit is none other than Olivier Sarkozy, the ex banker with UBS and half-brother of the French President. The firm manages 76 billion dollars worth of assets invested in the LBO, real estate and Risk Capital funds...

7.5% of Carlyle has been ceded to the Abu Dhabi government for 1,3 billion dollars. Rubenstein is an advocat (University of Chicago) and holds a Diploma in Political Science from the University of Duke. He began his career as Interior Security Vice Counsellor to President Carter in 1977. He spent two thirds of his time travelling to raise funds.

William Conway Jr (58), is worth 2,5 billion dollars. Daniel D’Aiello at age 61 is worth 2,5 billion dollars. He manages daily operations within Carlyle.

David Shaw 56 years old, is 462nd richest man and made his 2,5 billion dollar fortune in Hedge funds. He has a PHD from Stanford and uses complicated algorithms to exploit minute anomolies on the Markets. After holding a post as a Professor of Computer Science at Columbia, he joined Morgan Stanley before creating his Hedge Fund D. E Shaw & Co in an office situated over a library. His investment company is one of the most reputable in the world with an ultra selective recruitment policy (only 1 out of 500 candidates is hired). He sold a 20% stake of his business to Lehman Brothers in March 2007.

Thomas Barrack, 60 years old, is worth 2,3 billion dollars. Doctor in Law he began his career as a business advocat before investing with Robert Bass and creating Colony Capital in 1991. He invested in casinos, luxury hotels and real estate. Bass (60) is worth 5,5 billion dollars and his Private Equity firm, Oak Hill Capital administers 25 billion dollars worth of investments.

Thomas Lee, 63 years old, 605TH richest. Made his fortune in the LBO. In 1999 he founded Blue Star a fund of funds. In June 2007 he would have realised 43% net income profit. He gained a profitable return on his inheritance and bought out the business Snapple for 135 million dollars re-selling it for 1,7 billion dollars to Quaker Oats. He now manages his investments via Lee Equity Partners.

Michael Lee Chin, 677th richest man worth 1,8 billiion dollars is a Canadian originally from Jamaica and is the president of the AIC fund which he bought out in 1987 for 400 000 dollars. He now has at his disposal a dozen billion dollars worth of managed assets. Using Warren Buffet and Benjamin Graham as his models, he launced himself into finance. He also has investments in the Caribbean, in particular Jamaica.

Michael Price, 707th worth 1,7 billion inherited part of his fortune. In 1996, he sold Heine Securities to Franklin Resources for 670 million dollars and a 5-year contract. He now runs MFP Investors, whose assets under administration now exceed the billion mark, of which a portion is his own personal money.

Jérome Kohlberg Jr, 82 years old, 7785th worth 1,5 billion in LBO. As the "K" of "KKR" created with George Roberts and Henry Kravis, he retired from the society in 1987 and did not take part in the public leveraged buyout of RJR Nabisco for 25 billion dollars. Kohlberg founded Kohlberg & Co in 87 and retired in 94. The business is now run by his son James.

John Arnold, 33 years old,, 785th richest is the youngest billionaire on the Forbes list with a 1,5 billion dollars fortune. A Vanderbilt University graduate he started his career with Enron for whom he made 750 million dollars in 2001 when he was no more than 27 years old. He was awarded an 8 million dollar bonus.

When Enron collapsed he started his own firm Centaurus Energy, a Hedge Fund based in Texas and specialising in trading energy products. Last year he earned more than 2 billion dollars from his hedge fund.

At 75, Sanford Weil, the legendary CEO of Citigroup is worth 1,4 billion dollars.

Paul Monthe , April 2008

Article also available in : English EN | français FR

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