Summer is over. Like migrating geese, hedge fund managers have flocked back from the Hamptons to midtown Manhattan and Greenwhich, Connecticut. For many its back to the grind of getting their funds above their high water mark. Not so Timothy Barakett, co-founder of Atticus Capital. In August, he announced to investors and staff that he was closing down New York-based Atticus Capitals two main funds, returning almost $3 billion to investors, and getting out of the business.
It was an epiphany that came to him, he said, while walking on the beach (probably in the Hamptons where the Baraketts are summer residents, though his letter did not specify.) And the notoriously hard-working Barakett said he plans to devote more time to his personal philanthropy.
Taking Barakett at his word, what might these commitments be? Barakett isnt saying. But the most recent 990 for his foundation is quite revealing. In 2008, the Timothy and Michele Barakett Foundation had a total of $33 million in assets, that is significantly down from the $61.2 million it had at the end of 2007. Part of that drop is due to investment losses. The foundations investment in an entity called Dryden Capital, a fund for Atticus partners, is listed as having a book value of $55.2 million and a fair market value of $31.3 million (Dryden does not invest in Atticus funds, which lost between 25 percent and 40 percent in 2008).
But the Baraketts also put money to work. They gave $333,000 to The Dalton School in New York to support the exclusive private schools capital campaign, and $1.1 million to Harvard University in Cambridge, Massachusetts to support three existing scholarship funds. Then there was $25,000 to the Mount Sinai Childrens Center in New York to support the pediatrics department there, and $125,000 to the New York Presbyterian Hospital, in Manhattan, to benefit brain tumor and epilepsy research. The Barretts gave $25,000 to the Michael J. Fox Foundation. Formed by the actor Michael J. Fox with the intent of funding research into Parkinsons disease, the foundation is one of the most popular causes among hedge fund managers and Wall Street types.
The New York Public Library is another popular cause on the Manhattan social circuit. Barakett, a trustee for the NYPLs foundation, gave a $1 million donation to the librarys capital campaign. Though the donation was not made through this foundation, Barakett also gave money in 2008 to The Robin Hood Foundation. The ultimate in hedge fund charities, New York-based Robin Hood was established in 1988 by the fund manager Paul Tudor Jones with the aim of battling poverty in New York. A seat on its board is a coveted get among the hedge fund elite, and its annual gala has become a must attend event.
For Atticus investors worried that Barakett spent too much time focusing on his philanthropic commitments and not enough driving returns in 2008, the 990 discloses that he and his wife, the foundations two trustees, devoted on average an hour a week to the foundation. Presumably Barakett will have more time to give now that he has quit his day job.
Speaking of hedge fund managers and good causes, the charity A Leg to Stand On (ALTSO), co-founded in 2002 by hedge fund manager Mead Welles, is getting ready for its annual fundraiser Hedge Fund Rocktoberfest. The event, to be held at the B.B. Kings Blues Club & Grill in New York City on Thursday October 8, features hedge fund managers and finance executives who also play in bands. The money raised goes to ALTSO, which helps disabled children in emerging market countries by providing minor surgeries and prosthetic limbs. (Full disclosure: I volunteer for ALTSO.)
Welles, who runs the hedge fund Octagon Asset Management in New York, admits that this has been a more difficult fundraising environment then in years past. A Leg To Stand On is no stranger to overcoming adversity, but given the magnitude of what has occurred in the financial markets over the past year, we our facing our biggest challenge ever, raising funds in the current market environment, says Welles. Fortunately, when life serves up a bunch of sour lemons, there is one group that knows how to make lemonade, and thats the hedge funds. We couldnt be more grateful to ALTSOs friends and supporters in the hedge fund community. ALTSO is on track to have more corporate sponsors this year then ever.
The Alpha / Beta blog is devoted to news and insights about the alternative investment (Alpha) and the traditional asset management (Beta) industries. Institutional Investor staff writer Imogen Rose-Smith covers hedge funds, private equity and their investors. Julie Segal is an Institutional Investor staff writer covering money managers and pension funds, foundations and endowments.