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Hedge Fund Managers Can’t Always Hedge Their Politics

AQR co-founder Cliff Asness’ support of both Republican presidential candidate Marco Rubio and the International Rescue Organization highlights tricky issues around political endorsements.

Big-shot hedge fund managers seem to enjoy getting involved in politics almost as much as they enjoy getting involved in philanthropy. But sometimes those two pursuits can run headlong into each other.

For the most recent example, see Clifford Asness, an outspoken libertarian and co-founder of the $135 billion asset management giant AQR Capital Management. Asness, a passionate defender of free markets and a devotee of philosopher and novelist Ayn Rand, announced his endorsement of Marco Rubio for U.S. president earlier this month. Asness’ support of Rubio is not particularly surprising; the Florida senator, running for the Republican nomination, shares the field with a bevy of controversial candidates that Asness has publicly excoriated via his tendentious Twitter account. And Rubio and the University of Chicago Ph.D. are also a good philosophical match, at least economically speaking, as Asness recently explained to The Wall Street Journal.

“Rubio does the best job of articulating the connection of free and dynamic markets — of freedom — to human flourishing,” Asness said. “We thought about who would be a good president, times who could win.”

Asness, who declined to comment for this story, is also a major supporter of the International Rescue Committee, also known as IRC, a nonprofit organization that, in its own words, “responds to the world’s worst humanitarian crises and helps people to rebuild their lives.” The IRC has been on the front lines of the Syrian refugee situation, raising money to help some of the nearly 800,000 who this year alone have fled a country ravaged by civil war. Asness is one of the IRC’s overseers, a group that provides advice on policy, fundraising and other issues. He and his wife, Laurel, have given more than $5 million to the IRC, according to its most recent annual report, and were honored by the organization with a Humanitarian Leadership Award at its annual gala last year. The IRC has resettled refugees around the world and is calling on the U.S. to accept 100,000 Syrian refugees by the end of 2016.

Many countries around the world had agreed to take in a certain number of refugees from Syria, but after the terrorist attacks in Paris on November 13, committed by ISIS and leaving 130 dead, a number of U.S. politicians abruptly changed course. Some have called for an outright ban on letting refugees from Syria into the U.S., for fear that members of ISIS might be among them, and the U.S. House of Representatives recently passed a bill that would sharply restrict the admission of additional Syrians seeking asylum — a move the IRC sharply rebuked.

“It compromises the lives of people who are already some of the most victimized people in the world,” said the IRC in a statement issued after the bill’s passage. “It would set back U.S. humanitarian leadership and provide an excuse for those who wish to argue that the U.S. does not live up to the values it proclaims.”

Senator Rubio has flip-flopped on the issue, but his most recent statements indicate that he does not support President Barack Obama’s call to take in 10,000 refugees over the next year. Rubio, the son of Cuban immigrants, offered support for harboring refugees prior to the Paris attacks, telling Boston Herald radio, “Well, we’ve always been a country that’s been willing to accept people who have been displaced, and I would be open to that if it can be done in a way that allows us to ensure that among them are not infiltrated people who are part of a terrorist organization that are using this crisis.”

But after the Paris attacks, he expressed a decidedly different view on ABC’s This Week. “You can’t pick up the phone and call Syria, and that’s one of the reasons why I’ve said we won’t be able to take more refugees,” Rubio explained. “It’s not that we don’t want to; it’s that we can’t. Because there’s no way to background-check someone coming from Syria. Who do you call and do a background check on them?”

He appears to have softened his stance in recent days, saying on Fox News that whereas he is still concerned about how to vet Syrian refugees seeking entry into the country, he would allow for “common sense” exceptions: “A five-year-old orphan, a 90-year-old widow, a well-known Chaldean priest — these are obviously common-sense applications, and you can clearly vet them just by common sense.”

Rubio’s position on the issue is most similar to the recently quoted positions of his establishment rival, former Florida governor Jeb Bush, who argues that Syrian Christians should be allowed into the country, and differs from his far-right foes Donald Trump and Senator Ted Cruz, each of whom has called for an outright ban on Syrian refugees in the U.S.

For its part, the IRC is continuing its efforts to educate lawmakers about the resettlement process. “We are hopeful that, once the candidates and elected officials learn about the current process, they’ll understand that the system is secure and that the United States’ situation is very different from Europe’s,” the organization said in a statement to Institutional Investor. “Refugees are, as you may know, the most security-vetted group that comes to the United States.”

Of course, this is not the first time political candidates have clashed with their wealthy backers on major social issues. Both Asness and Elliott Management Corp. founder and Republican backer Paul Singer were major advocates for marriage equality, in direct opposition to most Republican candidates, including Senator Rubio. And major hedge fund supporters of Democratic candidates have sometimes clashed with their chosen candidates on economic policy issues. Longtime Hillary Clinton supporter Thomas Steyer, who retired from his Farallon Capital Management hedge fund firm a few years ago to focus on environmental issues, not so subtly criticized the former secretary of State for being slow to weigh in on the controversial Keystone XL pipeline (in late September Clinton finally came out against it).

But given Asness’ very substantial support of an organization that hopes to convince politicians that it is wrong to deny Syrian refugees entry into the U.S., it remains to be seen whether he can influence Rubio behind the scenes to break with other Republican candidates.

Follow Amanda Cantrell on Twitter at @amandakcantrell.

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