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Candidates follow the money - to hedge fund billionaires

By A. James Memmott

April 23, 2008 at 9:00am

Willie Sutton robbed banks because that’s where the money is.

Political candidates go hat in hand to hedge fund managers because that’s where even more money is.

Andrew Ross Sorkin of The New York Times reported yesterday that four of the top 10 earners among hedge fund managers last year have given to Sen. Barack Obama of Illinois, a candidate for the Democratic presidential nomination.

Richest amongst these Obama givers is George Soros of Soros Fund Management, who earned $2.9 billion in 2007 to be ranked second on the list of top earners.

Sen. Hillary Rodham Clinton of New York, the other Democratic contender and the winner of Tuesday’s Pennsylvania primary, has one of the top 10 on her side.

James H. Simons, of Renaissance Technologies Corp., the number 3 earner at $2.8 billion has given her $4,600.

Sen. John McCain of Arizona, the presumptive Republican candidate, didn’t get any direct contributions from the top 10 earners on the list, which was compiled by Alpha magazine.

Some of the top 10 moneymen, including John A. Paulson of Paulson & Company, number 1 on the list at $3.7 billion, gave to other Republican candidates. (Paulson went with former New York City mayor Rudolph Giuliani.)

And some of the hedge funders either didn’t give or gave to committees, not candidates.

The amount given directly by these billionaires is miniscule — “pocket lint,” in Sorkin’s term. Federal law prevents them from contributing more than $4,600 directly to candidates. (That’s $2,300 for the primaries, $2,300 for the general election.)

But their donations may give some indication of the candidates they think will win or will be kindest to the now lightly regulated hedge fund market.

On the strength of the top 10 earners, it would seem that these very rich people are betting on an Obama win.

However, a look at the full list of top 50 earners reveals a more mixed message.

Both Clinton and McCain pick up support in the middle and lower ranges of the list, a list that ends with the very wealthy David Shaw of D.E. Shaw & Co. at number 50.

Shaw, who cleared $210 million in 2007, has given $4,600 to Clinton and $58,500 to Democratic groups, according to openSecrets.org.

Other managers in the tail end of the top 10 list went with Clinton.

Thomas Steyer (no. 43), a $230 million earner at Farallon Capital Management, and Marc Lasry (tied for 44), who took in $225 million at Avenue Capital Group, sent money her way.

(Until she took a leave to help with the campaign, Clinton’s daughter, Chelsea, was working for Avenue Capital.)

Daniel Och of Och-Ziff Capital Management, who was tied for 41st with $245 million in earnings, gave to both Clinton and McCain.

He also contributed to Giuliani and to another candidate who dropped out, Sen. Christopher Dodd, a Democrat from Connecticut.

Several other top 50 hedge fund managers have hedged their bets on the presidential race. None did it more broadly than Seth A. Klarman of Baupost Group, Inc., who made $425 million in 2007 and finished at number 15 on the list.

Klarman has given to Clinton, McCain and Obama. He’s also given to Giuliani, former Massachusetts governor Mitt Romney, a Republican, to Dodd, as well as to Sen. Joseph Biden, the one-time Democratic candidate from Delaware.

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