HENRY SWIECA VIVIDLY REMEMBERS THE FIRST TIME HE met Glenn
Dubin, his partner in Highbridge Capital Management, the New
York City hedge fund firm. It was in 1960 in a Bennett Park
sandbox at West 183rd Street and Fort Washington Avenue in the
northernmost reaches of Manhattan.
"We shared peanut-butter-and-banana
sandwiches," recalls the 47-year-old Swieca, with a grin.
Dubin, also 47, just laughs, saying, "His memory is much better
The two grew up in Washington Heights, a
working-class neighborhood in the shadow of the George
Washington Bridge. All through their school years, they
remained fast friends. Swieca attended a private school on the
Upper West Side -- the Franklin School (now merged with the
Dwight School) -- on a scholarship, whileDubin starred in
football and wrestling at John F. Kennedy High School in
Riverdale in the Bronx. But the friends, who lived just five
blocks apart, would often spend hours on the phone in the
evenings, with Dubin, the jokester, invariably cracking up his
The pair roomed together during their
freshman and sophomore years at the State University of New
York at Stony Brook. And it was at the leafy Long Island school
that Swieca and Dubin teamed up for their first business
venture: taking over the chocolate-distribution business of
Dubin's deceased grandfather. They earned a fair amount, but,
Swieca concedes, "We ate too much chocolate."
The two pals still have a taste for
sweets. As founding partners of Highbridge Capital Corp., a $6
billion hedge fund, they earn tens of millions a year, counting
their take from the firm's lucrative 25 percent performance fee
and the gains on their large stake in the fund. That's not to
mention the not inconsiderable proceeds from their other
business, Dubin & Swieca Capital Management, which runs a
pair of funds of hedge funds, Overlook Performance Fund and
Pinehurst Partners, with a combined $1 billion in assets.
The clients of Highbridge Capital have
also done rather handsomely -- and with remarkable consistency.
Highbridge's returns, net of all fees, from the time the fund
was launched in September 1992 through April 2004, average more
than 16 percent a year, or about 50 percent better than the
Standard & Poor's 500 index over the same period -- with a
lot less risk (see chart, page 76). Highbridge has posted gains
in an astounding 127 of 140 months since its inception, and the
fund's standard deviation of 5 percent indicates that it's one
third as volatile as the S&P. Moreover, Highbridge's Sharpe
ratio -- its incremental return over the risk-free Treasury
bond rate -- is 2.17, or more than four times that of the
S&P 500 (see table, page 76).