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| About some Famous Investors |
WARREN BUFFETT
Warren Buffett’s determination and creativity have made him who he is now : the chairman of a long-term investment company which has more
than $2 billion in holdings. As a child, Buffett was already ambitious.
He was an enthusiastic and industrious paper boy for the Washington Post, and tried to cover more than one route at the same time. He also made
money by collecting and selling lost golf balls. Buffett’s interest in finance was clear extremely early on in his life. He started playing the stock
market with one of his sisters when he was eleven. At twelve, he was betting on horses, and by high school he had started a business (pinball
machines) with a friend, which earned him fifty dollars a week. Not only did he own a business by graduation, but he also had bought himself forty
acres of Nebraskan farm land with his profit. Graduate school was a formative time for Buffett.
It was there that he met Benjamin Graham, an economic scholar whose work Buffett had begun studying in college. Buffett believed strongly in
Graham’s theory that it is wise to look for stocks of companies which are undervalued, which will most probably prosper with a little time. Thus
began Buffett’s untraditional approach to portfolio management. After working for his father’s investment banking company for the three years after
business school, Buffett returned to Graham and worked as a security analyst at Graham’s company for two years until 1956. In that year, at the age
of twenty-five, Buffett started his own investment company, the Buffett Partnership, using $5,000 of his own funds and collecting $100,000 from
interested friends and family.
One of the smartest moves made by Buffett’s company at that time was to invest in American Express. In 1963, a scandal surrounded AmEx, and
Wall Street believed the company was near the end. But Buffett, always with his wits about him and his thinking cap on, noticed when in restaurants
and shops that customers were still using the card to buy. He went ahead and bought 5 percent of the stock, which by 1961 had risen from 35 to
189 market points. Buffett is now chairman of Berkshire Hathaway Inc. (click here for more info), which makes the long-term investments which
Buffett is so adept at choosing.
Warren Buffett’s determination and creativity have made him who he is now : the chairman of a long-term investment company which has more
than $2 billion in holdings. As a child, Buffett was already ambitious.
He was an enthusiastic and industrious paper boy for the Washington Post, and tried to cover more than one route at the same time. He also made
money by collecting and selling lost golf balls. Buffett’s interest in finance was clear extremely early on in his life. He started playing the stock
market with one of his sisters when he was eleven. At twelve, he was betting on horses, and by high school he had started a business (pinball
machines) with a friend, which earned him fifty dollars a week. Not only did he own a business by graduation, but he also had bought himself forty
acres of Nebraskan farm land with his profit. Graduate school was a formative time for Buffett.
It was there that he met Benjamin Graham, an economic scholar whose work Buffett had begun studying in college. Buffett believed strongly in
Graham’s theory that it is wise to look for stocks of companies which are undervalued, which will most probably prosper with a little time. Thus
began Buffett’s untraditional approach to portfolio management. After working for his father’s investment banking company for the three years after
business school, Buffett returned to Graham and worked as a security analyst at Graham’s company for two years until 1956. In that year, at the age
of twenty-five, Buffett started his own investment company, the Buffett Partnership, using $5,000 of his own funds and collecting $100,000 from
interested friends and family.
One of the smartest moves made by Buffett’s company at that time was to invest in American Express. In 1963, a scandal surrounded AmEx, and
Wall Street believed the company was near the end. But Buffett, always with his wits about him and his thinking cap on, noticed when in restaurants
and shops that customers were still using the card to buy. He went ahead and bought 5 percent of the stock, which by 1961 had risen from 35 to
189 market points. Buffett is now chairman of Berkshire Hathaway Inc. (click here for more info), which makes the long-term investments which
Buffett is so adept at choosing.
GEORGE SOROS
Appreciates the value of freedom more than most. During World War I, his father was captured by the Russians but managed to escape. Then
during World War II, his family hid from the Nazis after Hungary allied itself with Germany.
Came to U.S. in 1956 with economics degree in hand. In 1969, started Quantum Fund with James Rogers, who broke with him in 1981. Today, as a
70% owner of $2.1 billion Quantum, the world's largest offshore investment fund, Soros and the other six managing directors split 15% of the
annual profits. He spends most of his time in his home in England and helping fellow Hungarians and other Eastern Europeans reacquaint
themselves with capitalism.
To bankroll that effort, he created the Open Society Fund in 1979 and the Soros Foundation-Hungary in 1984. Known as "an alternate ministry of and
Eastern European countries aimed at cultural and economic revitalization.
Soros is the author of The Alchemy of Finance, published in 1987, in which he outlines, somewhat circuitously, his " theory of reflexivity " which
holds that perceptions change events which in turn, change perceptions. This is not his first attempt at writing. Soros did extensive work several
years earlier on a philosophical book that was never completed.
Despite the fact that Hungarian-born George Soros spends much of his time these days touting capitalism in former East Bloc countries, he was
still able to find a way for his $3.2 billion offshore Quantum fund, which rose around 63%, to outperform most managed porfolios and market
indexes. Who says bigger can't also perform better? After he claimed a chunk of Quantum's 15% incentive fee and the fund's entire 1%
management fee, Soros's personal take computed into 9 futures. Not too shabby, considering how much time the 61-year-old globe-trotter spends
away from home. One of his more recent pet projects has been the establishment of the Central European University in Budapest and Prague. In
the past year or so, he still found time to launch three spin-off funds - Quasar International Partners, Quantum Emerging Growth and Quota.
How do you make $650 million in one year if you're not Mike Milken ? Simple. First, start the year with about $800 million of your own money and
other $4 billion of other people's nearly $5 billion in all under management. Then hire crack managers and traders who rack huge returns trafficking
highly volatile currencies and derivatives instruments. Finally, charge hefty management and incentive fees. Result : Last year 62-year-old George
Soros's Quantum Fund was up 68.1% after fees; Quantum Emerging, up 57%; Quasar International, 55.7%; and Quota, 37.4%. Quantum and
Quasar charge 1% management fees and 15% of the appreciation while the other two funds charge 1% plus 20%.
Moreover, Soros invests a big portion of his assets in currencies and index-linked derivatives but never for long. He flits in and out of these
instruments incessantly, rarely holding a position for more than a few days. As a result, he realizes capital gains on the vast bulk of the nominal
returns he generates in a given year. Do the arithmetic and you'll see that at a bare minimum, Soros extracted more than $400 million in profits from
his personal hoard.
A conservative estimate of his share of his firm's incentive fees tacks on another $200 million or so to the total. Finally, Soros awards himself all his
firm's management fees, which netted him about $50 million. Presto: $650 million, although his take might have been much higher. Today, Soros's
clutch of five offshore funds boats assets well over $7 billion, including a $525 million real estate fund he recently formed in partnership with Paul
Reichmann, a former controlling shareholder with bankrupt Canadian real estate developer Olympia & York. This is not to be mistaken for Soros's
new $775 million partnership with British Land to invest in properties.
In 1993, George Soros managed to earn as much individually as McDonald's did with the help of 169, 600 employees. How did he do it? Fees,
great performance and the power of compounding.
Let's run the numbers: To start off, the 63-year-old manages about $11 billion in several offshore funds, including the relatively well-known Quantum
Fund, as well as a real estate fund. Last year each of his funds turned in spectacular performances. Leading the way: Quantum Emerging Growth,
up 109% before fees, followed by Quantum and Quota, each up more than 72%. Then Soros's operation gets 15% incentive fee, which is less than
the going 20% rate for hedge funds. Soros himself gets the 1% management fee on assets as of year-end and then pays all of the expenses of the
firm. He also has more than $1 billion of his own capital in the funds. Add it all up, including realized gains on his own dough, and the guy made a
minimum of $1.1 billion.
Most other mortals would have been ecstatic to earn at least $70 million in one year, but for George Soros it was quite a comedown a drop of more
than 93% from the prior year. Why the falloff ? Because, like most of the other huge hedge funds and offshore funds, Soros got whipsawed by the
change in the direction of global interest rates and the sudden collapse of many emerging markets. His Quantum Emerging Growth fund and Quota
fund were down 13.3% and 10.1%, respectively. And although the flagship Quantum fund was up 2.7%, its premium shrank . So about all poor
George got by the way of compensation was his 1% management fee. At the moment, Soros, 64, is trying to liquidate the U.S. real estate fund he
started with Paul Reichmann a scant two years ago. While Soros's philanthropic efforts in his native Hungary and other Middle European countries
are well documented, he makes less publicized charitable contributions. For example, the Open Society, another of his foundations, plans to give
$5 million a year for three years to examine U.S. attitudes about dying. In addition, a few years ago he began giving money to the Drug Policy
Foundation, a lobbying group that is exploring various drug legalization schemes. Meanwhile, the Soros Foundation is making every effort to solve
the mysterious April disappearance of Frederic Cuny, the relief expert who was setting up a hospital in Chechnya for the foundation.
Appreciates the value of freedom more than most. During World War I, his father was captured by the Russians but managed to escape. Then
during World War II, his family hid from the Nazis after Hungary allied itself with Germany.
Came to U.S. in 1956 with economics degree in hand. In 1969, started Quantum Fund with James Rogers, who broke with him in 1981. Today, as a
70% owner of $2.1 billion Quantum, the world's largest offshore investment fund, Soros and the other six managing directors split 15% of the
annual profits. He spends most of his time in his home in England and helping fellow Hungarians and other Eastern Europeans reacquaint
themselves with capitalism.
To bankroll that effort, he created the Open Society Fund in 1979 and the Soros Foundation-Hungary in 1984. Known as "an alternate ministry of and
Eastern European countries aimed at cultural and economic revitalization.
Soros is the author of The Alchemy of Finance, published in 1987, in which he outlines, somewhat circuitously, his " theory of reflexivity " which
holds that perceptions change events which in turn, change perceptions. This is not his first attempt at writing. Soros did extensive work several
years earlier on a philosophical book that was never completed.
Despite the fact that Hungarian-born George Soros spends much of his time these days touting capitalism in former East Bloc countries, he was
still able to find a way for his $3.2 billion offshore Quantum fund, which rose around 63%, to outperform most managed porfolios and market
indexes. Who says bigger can't also perform better? After he claimed a chunk of Quantum's 15% incentive fee and the fund's entire 1%
management fee, Soros's personal take computed into 9 futures. Not too shabby, considering how much time the 61-year-old globe-trotter spends
away from home. One of his more recent pet projects has been the establishment of the Central European University in Budapest and Prague. In
the past year or so, he still found time to launch three spin-off funds - Quasar International Partners, Quantum Emerging Growth and Quota.
How do you make $650 million in one year if you're not Mike Milken ? Simple. First, start the year with about $800 million of your own money and
other $4 billion of other people's nearly $5 billion in all under management. Then hire crack managers and traders who rack huge returns trafficking
highly volatile currencies and derivatives instruments. Finally, charge hefty management and incentive fees. Result : Last year 62-year-old George
Soros's Quantum Fund was up 68.1% after fees; Quantum Emerging, up 57%; Quasar International, 55.7%; and Quota, 37.4%. Quantum and
Quasar charge 1% management fees and 15% of the appreciation while the other two funds charge 1% plus 20%.
Moreover, Soros invests a big portion of his assets in currencies and index-linked derivatives but never for long. He flits in and out of these
instruments incessantly, rarely holding a position for more than a few days. As a result, he realizes capital gains on the vast bulk of the nominal
returns he generates in a given year. Do the arithmetic and you'll see that at a bare minimum, Soros extracted more than $400 million in profits from
his personal hoard.
A conservative estimate of his share of his firm's incentive fees tacks on another $200 million or so to the total. Finally, Soros awards himself all his
firm's management fees, which netted him about $50 million. Presto: $650 million, although his take might have been much higher. Today, Soros's
clutch of five offshore funds boats assets well over $7 billion, including a $525 million real estate fund he recently formed in partnership with Paul
Reichmann, a former controlling shareholder with bankrupt Canadian real estate developer Olympia & York. This is not to be mistaken for Soros's
new $775 million partnership with British Land to invest in properties.
In 1993, George Soros managed to earn as much individually as McDonald's did with the help of 169, 600 employees. How did he do it? Fees,
great performance and the power of compounding.
Let's run the numbers: To start off, the 63-year-old manages about $11 billion in several offshore funds, including the relatively well-known Quantum
Fund, as well as a real estate fund. Last year each of his funds turned in spectacular performances. Leading the way: Quantum Emerging Growth,
up 109% before fees, followed by Quantum and Quota, each up more than 72%. Then Soros's operation gets 15% incentive fee, which is less than
the going 20% rate for hedge funds. Soros himself gets the 1% management fee on assets as of year-end and then pays all of the expenses of the
firm. He also has more than $1 billion of his own capital in the funds. Add it all up, including realized gains on his own dough, and the guy made a
minimum of $1.1 billion.
Most other mortals would have been ecstatic to earn at least $70 million in one year, but for George Soros it was quite a comedown a drop of more
than 93% from the prior year. Why the falloff ? Because, like most of the other huge hedge funds and offshore funds, Soros got whipsawed by the
change in the direction of global interest rates and the sudden collapse of many emerging markets. His Quantum Emerging Growth fund and Quota
fund were down 13.3% and 10.1%, respectively. And although the flagship Quantum fund was up 2.7%, its premium shrank . So about all poor
George got by the way of compensation was his 1% management fee. At the moment, Soros, 64, is trying to liquidate the U.S. real estate fund he
started with Paul Reichmann a scant two years ago. While Soros's philanthropic efforts in his native Hungary and other Middle European countries
are well documented, he makes less publicized charitable contributions. For example, the Open Society, another of his foundations, plans to give
$5 million a year for three years to examine U.S. attitudes about dying. In addition, a few years ago he began giving money to the Drug Policy
Foundation, a lobbying group that is exploring various drug legalization schemes. Meanwhile, the Soros Foundation is making every effort to solve
the mysterious April disappearance of Frederic Cuny, the relief expert who was setting up a hospital in Chechnya for the foundation.
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