How to Invest Like a Trump Cabinet Pick
A look at which alternative-investment firms Trump and members of his administration have entrusted with their wealth.
A hedge fund manager who made billions shorting subprime mortgages and another who is under investigation by the Securities and Exchange Commission for insider trading are among the money managers favored by President Donald Trump and his cabinet picks, according to financial disclosure forms.
The 45th president of the United States has nominated the wealthiest cabinet in history – Trump’s current nominees have a collective net worth of $13 billion. With the publication of financial disclosure forms for Trump’s cabinet nominees and top advisers by the United States Office of Government Ethics, a picture of how they invest their own money is emerging.
One hedge fund manager favored by Trump is John Paulson. Trump’s 2016 financial disclosure forms show that the real-estate tycoon turned president of the United States had invested between $3 million and $5 million in three Paulson & Co. hedge funds: Paulson Credit Opportunities, Paulson Advantage, and Paulson Partners. Paulson investors in Trump’s inner circle include Steven Mnuchin, Trump’s candidate for Treasury secretary, and Anthony Scaramucci, a special adviser to the White House whose fund-of-hedge-funds firm SkyBridge Capital was in and out of Paulson funds over the past eight years.
Another hedge fund manager-GOP supporter – and an outspoken critic of former president Barack Obama – is Omega Advisors founder Leon Cooperman. Mnuchin lists Omega among his investments. In recent years Omega’s health care bets have been particularly profitable for the fund and its investors. On the downside, the SEC charged Cooperman last year with insider trading over Omega’s trading of the securities of Atlas Pipeline Partners. (As Treasury secretary, Mnuchin would not have any direct influence over that case. Coooperman has vowed to fight the charges.)
Like Mnuchin, Cooperman is a Goldman Sachs alum – as is Dan Och, founder and CEO of Och-Ziff Asset Management, another Mnuchin hedge fund holding. Mnuchin has much of his money tied up in his own investments, specifically funds relating to his film-financing business, as well as in OneWest Bank Group, the bank and mortgage foreclosure company that he and an investment syndicate acquired out of bankruptcy (under its previous name, IndyMac) and built up after the 2008 housing and banking collapse.
Wilbur Ross, Trump’s pick for Commerce secretary, mostly eats his own cooking when it comes to his investment portfolio. Other Trump nominees, specifically Rex Tillerson and Rick Perry, have, or had, significant interests in the fossil fuel economy. Given that one is the former CEO of Exxon, the world’s largest fossil fuel company, and the other is the former Republican governor of oil-loving Texas, a concentration in carbon-related assets is to be expected. Tillerson, Trump’s pick for secretary of State, has very little in the way of alternative investments – the bulk of his wealth is in Exxon stock. Tillerson does have an interest in an entity called HF Renaissance EQ, which, in the nine-page letter accompanying his financial disclosures and explaining how he would deal with his holdings, he promised to divest from.
Energy Secretary nominee Perry was, until recently, a board member of Energy Transfer Partners, the company building the controversial Dakota Access Pipeline. He still holds shares in the company, but has said he will divest as soon as he secures the nomination. Perhaps surprisingly, Perry also invests in Elon Musk’s battery-powered car company Tesla Motors. Perry’s standout private equity holdings are two investments in Grey Rock Energy Partners, a Texas-based oil-and-gas private equity firm in which his son is a partner.
One investment that did not work out well for some of the nominees: Theranos. Trump’s pick for secretary of Defense, General James Mattis, served on the board of the troubled biotech company and has stock in it. His disclosure forms list the value of his 416,667 shares as “not readily ascertainable.”
Among Trump’s cabinet nominees whose financial disclosure forms have been published, the largest is for prospective Education Secretary Elisabeth (Betsy) DeVos, a member of one of Michigan’s wealthiest families. DeVos’ public financial disclosure report – while not quite beating Trump’s 104-page tome – comes in at 80 pages. Among the private equity managers in which DeVos invests are Apollo Global Management, Graham Partners, Terra Firma Capital Partners, Fort Washington Capital Partners Group, Bridge Street Capital, Cuyahoga Capital Partners (a secondary market private equity fund), and others. Through a fund managed by Madison Capital Funding, DeVos also has an investment in Evanston Capital Management, a fund-of-hedge-funds firm based in Evanston, Illinois.
Not all of Trump’s nominees are so well heeled. Some invest modestly, mostly in mutual funds and real estate, holding portfolios that look more like those of Main Street Americans – though it is doubtful that anyone on Main Street gets as many speaking engagements in two years as Housing and Urban Development pick Ben Carson. The former surgeon’s financial disclosure report shows that he is a speaking machine. However, if the dollar takes a nose dive, more of Main Street might be tempted to invest in gold and silver, like Office of Management and Budget director nominee Mick Mulvaney, who has between $15,001 and $50,000 in gold bars and $1,001 to $15,000 in silver bars.