The Billionaire's Club
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Behind Cohen on the Connecticut list are Ray Dalio of Bridgewater Capital Associates, reportedly the biggest hedge fund in the world, and Edward Lampert, founder of ESL Investments, another hedge fund, who is also chairman of Sears Holdings Corp. They rank Nos. 55 and 101, respectively, with net worths of $5 billion and $3.1 billion.
Paul Tudor Jones, No. 110, whose Tudor Investments Corp., a fund of funds (or collection of hedge funds), has averaged impressive annual returns over the past 20 years. Forbes estimates his fortune at $3 billion. Coming in at No. 252 is Lone Pine Capital founder Stephen Mandel, who apprenticed at Julian Robertson’s legendary Tiger Management hedge fund. Lone Pine is routinely one of the top-performing funds in the world. Mandel’s wealth is estimated at $1.6 billion.
No matter their numerical ranking—a crude way, admittedly, of measuring success—Greenwich residents on the Forbes 400 do seem to enjoy the company of their peers. “People who are on the list tend to associate with other people on the list,” says Ron Sheiman, a Westport tax attorney and adviser to high-net-worth individuals, including some who’ve made the Forbes 400. “Being in a select class of people affords them networking opportunities and entrée into circles that they might not otherwise have.”
One question that comes to mind when considering Forbes-caliber money is this: How can one person possibly make that much?
Basically, hedge funds and other alternative investment pools make money by playing with other wealthy people’s money. In a simplistic explanation of a highly complex business, by aggressively playing with huge amounts of pooled capital and “hedging” their bets—going short and long on publicly traded securities—then using “leverage” (meaning borrowing) to increase the risks but also the rewards of those bets, hedge-fund managers can reap huge profits for their investors but also for themselves. Fund managers typically collect a 2 percent management fee and a 20 percent, or higher, performance fee.
“It is possible for them to make upward of a billion dollars in one year because they are managing large sums of money in a way that lets them share in the profits with their investors,” says Richard Wilson. Of course their personalities play into it, too.
“They are very hungry to do very, very well,” he says.
In October 1987, Paul Tudor Jones bet big that Black Monday would happen, and tripled his wager when it did. In 2004, Edward Lampert became the first hedge funder to earn more than $1 billion in a single year. Steve Cohen topped that in 2009, when he made $1.4 billion.
Disposable income in these lofty reaches makes many things possible, including producing even more disposable income. But it most noisily manifests itself in real estate. And in Greenwich, that can get really loud.
A billion is the new million. It buys whatever it wants. One of the things it most values and wants, along with luxury, is privacy. None of the Connecticut 11 approached for this article would agree to discuss their inclusion on the Forbes list, or anything else, for that matter. For clues to where and how they live, the best place to look is the Greenwich assessor’s office, which rigorously tracks residents’ property.
In one of the biggest real estate transactions in Greenwich history, Thomas Peterffy, the Hungarian-born founder of the automated firm Interactive Brokers Group, bought 80 acres and a small village of buildings in Conyers Farm, a sprawling gated equestrian community in backcountry Greenwich, six years ago for a reported $46 million. The property includes a turn-of-the-20th-century, 8,038-square-foot mansion surrounded by farmland and woods. While most Greenwich homeowners provide photos of their property to the assessor’s office, Peterffy refused. According to field cards filed in the office, however, other structures on the land include a barn, two conventional houses, a guest house and a pool house. He also owns a 3,000-plus-square-foot condo on Sound Shore Drive in town.
Steve Cohen lives in a 35,000-square-foot pile on 14 acres in north Greenwich, part of an estate he bought in 1998 for $14 million. Unless one has several hundred children (Cohen reportedly has seven), why would anyone need that much room? Well, if you’ve got multiple billions, why not? The 30-room mansion includes an indoor pool and basketball court, and a 6,734-square-foot outdoor ice rink with its own Zamboni. The house is said to resemble Buckingham Palace.