Posted on 10/06/2004 5:52:35 AM PDT by OESY
George Soros, the billionaire financier, is handing more control of his money management firm to two of his sons as he continues to scale back the focus of his investment firm.
Late Monday, Mr. Soros disclosed that he was promoting one son, Jonathan, to be a deputy chairman of the firm, Soros Fund Management, sharing the title with another son, Robert, who was named chief investment officer last month. Mr. Soros remains chairman of the firm, which manages $12.8 billion.
The two sons will oversee the investment business day to day.
At the same time, Mr. Soros is spinning off divisions investing in real estate and debt, according to Monday's letter to investors. The firm is also planning to spin off a buyout business. Together, the three investment groups account for some $4 billion of Soros assets under management.
Mark Schwartz, chief executive of Soros Fund Management, said in the letter that the moves were part of an effort "to return the firm to its core activity as a hedge fund manager," focusing more on active trading.
Mr. Soros, 74, made his name as one of the earliest and most successful managers of hedge funds, aggressive portfolios run on behalf of wealthy investors. In 1992, his funds made more than $1 billion from bets against the value of the British pound.
"He is one of the great investment geniuses of all time," said Dixon Boardman, managing general partner of Optima Fund Management, which had been an investor in the flagship Quantum fund.
More recently, Mr. Soros has been better known less for his financial bets than his campaign to defeat President Bush in next month's election. He has contributed about $18 million to Democratic advocacy groups, and yesterday began a nationwide speaking tour to urge voters to reject Mr. Bush.
"George seems to be focused on other things these days," another investor in hedge funds said.
Mr. Soros has been struggling to figure out how to run Soros Fund Management ever since it was stung by losses on technology stocks and other investments in 2000. That year, the Quantum fund lost 15.4 percent, and his longtime chief strategist, Stanley Druckenmiller, left the firm.
After Mr. Druckenmiller's departure, Mr. Soros said he would adopt a more conservative approach, warning investors to expect lower returns. That led many to redeem their holdings. Today, Soros Fund Management oversees $12.8 billion, down from a peak of $22 billion in 1998. Much of the firm's assets belong to Mr. Soros and his family.
Over the last four years, a series of portfolio managers have come and gone, with the most recent chief investment officer, Jacob Goldfield, leaving last month to start an investment fund of his own.
Now, Mr. Soros has decided to consolidate control of his investment firm in the hands of his sons.
Robert Soros, 41, the oldest of his five children, will run the Quantum Endowment Fund, an $8.3 billion portfolio. Robert, who graduated from New York University in 1986, had a series of jobs on Wall Street, including a stint in the research department of a German bank, before joining the family firm a decade ago. He was chosen to run one of the firm's portfolios in 1996.
Jonathan Soros, 34, is better known for sharing his father's passion for politics, working with MoveOn.org and other advocacy groups. He received a bachelor's degree from Wesleyan University in 1992 and a law degree and a master's in public policy from Harvard. He has worked in the firm's private equity group for the last two years, and will focus on its operations.
A spokesman said neither George Soros nor his sons were available for comment.
Returns for the Quantum fund have been relatively strong despite the turnover at the firm. The fund rebounded from its losses in 2000, returning 13.8 percent the next year, after fees. It lost 1.7 percent in 2002, but rose 15.3 percent last year, according to people briefed on its results. The fund's performance is flat through August.
Mr. Soros himself earned $750 million last year, more than any other hedge fund manager, according to Institutional Investor magazine.
Even as the hedge fund industry has grown robustly in the last decade, no fund manager has emerged to match the scope and influence of Mr. Soros, who started the Quantum fund 35 years ago.
Investors in hedge funds said the markets are a lot closer to being transparent than they were at the height of Mr. Soros's fame, making it difficult for any one investor to have an edge.
And with pension funds placing increased amounts in these portfolios, managers of hedge funds are less eager to take big risks.
"It's a different era," Mr. Boardman said. "In the old days, people invested with geniuses and didn't mind a bit of volatility. These days, he said, investors "don't want to see a one-man band; they want more of a process."
WHO THE "H" cares.
YIKES!! I had never wanted to look past the evil of George Soros himself. And now I have to realize he did breed. I guess it would be bad for me to pray his sons destroy his fortune and that he ends up drooling in a hovel.
Not only did he breed, but like his Dad, his two sons won't be serving in the military of his adoptive country.
Well, be bad then. Besides, he doesn't believe in eliminating the inheritance tax anyway so when he dies his estate should be required to fork over at least 55% to the government in accordance with his "beliefs", no? He shouldn't be allowed to hand it over to his hatchlings.
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