Published On: Wed, May 20th, 2015

Why Jews are Among the Best Hedge Fund Managers? David Tepper, George Soros, Leon Cooperman and More


(L-R)  John Paulson ,   George-Soros,   Carl Icahn,   Stephen Shwartz,   Leon Black

Jews are well-known for being entrepreneurs, traders and business-people who beat the odds. Out of the best 25 money managers since the advent of American Capitalism, 17 are Jewish! It is something that leaves many people dumbfounded because its probability of occurring is almost zero and, therefore, very difficult to compute. Some of those in the top 25 are of course very famous: George Soros, Steven Cohen, James Simon, David Tepper, John Paulson, Carl Icahn, Daniel Loeb, Leon Cooperman, Seth Klarman, Israel Englander, David Einhorn, Bruce Kovner.

The only Jewish-majority nation on the planet — Israel — is very tiny and has a very small population, yet Jews are renowned as the best performing hedge-fund managers on the planet. Figures from the Israel Central Bureau of Statistics (ICBS) indicate that the Jewish nation of Israel has a population of just 8.1 million. In addition, the total number of people of Jewish origin who are living in the Diaspora is roughly 7.8 million. This puts the total number of Jews on the entire planet at around 15.9 million out of a global population of 7.3 billion (7300 million), which is a percentage of a meager 0.22%! From the figures it seems, only about one out of every 459 people (1/459) globally is a Jew, yet Jews literally lead the world when it comes to business and entrepreneurship.

L-R) Bill Ackman,   David Tepper,   Daniel Och,   Nelson Peltz,   Seth Klarman

Some of the Top Jewish Hedge Fund Managers Are

George Soros: the chairman and founder of Soros Fund Management and the founder of Quantum Fund. He is reported to have returned 20%-plus annualized in the last four decades. What this means is that if $10 million was invested with his hedge fund 40 years ago and compounded at an annual rate of 20%, it would be worth a whopping $14 billion today! Can you image what 30% annualized compounded returns could make?

James Simon (who was raised in a Jewish family) is the first in our hedge funds returns rank with 35%+ annualized returns in 27 years. David Tepper is another hedge fund start with 27% annualized returns for 22 years active management.  Steven A. Cohen has achieved more than 30% annualized returns for 20+ years. All of them were also raised in Jewish families.

(L-R) David Einhorn and Israel Englander,   Marc Lasry,   Kravis and Roberts -KKR

Other top hedge fund managers who are either wholly or partly Jewish include:

John Paulson (Jewish mother, non-Jewish father), who made 12% + return for 19 years. Carl Icahn (both parents ethnic Jews but father an atheist) returned 21% annualized for 15 years.

And then there are Larry Robins, Daniel Loeb, Leon Cooperman, Eddie Lampert, Daniel Och, Nelson Peltz, Israel Englander, Seth Klarman, David Einhorn and Marc Lasry,  Michael Steinhardt, Bruce Kovner.

So, why are Jews so successful in business, especially in America? Some of the reasons include:

1) The Location and Timing of Jewish Immigration into the U.S.

Nearly everybody in the United States today is a descendant of immigrants from across the globe, including Jews. But geographically, Jewish immigration was different in that it overwhelmingly favored unprecedented success in finance, especially in the field of investment management.

Unlike most other immigrants into America who moved to farms, Jews moved directly to towns and cities, with 1st and 2nd generation Jewish immigrants going to work in retail, textiles, industry as well as other urban trades. In addition, most Jews came to the U.S. either in the late 19th or early 20th centuries. This period is significant because apart from being easier to rise to professional seniority, there was a boom in finance and economy, particularly for investment management like hedge funds.

(L-R) Daniel Loeb,   Bruce Berkowitz,   Leon-Cooperman,   Steve Cohen

 2) Unavailability of Alternative Career Options for Jews

Jewish focus on finance and associated urban trades dates back to the Middle Ages and beyond. This did not come about by chance but was prompted by a number of factors, some of them not so positive. In  Catholic Europe, where Christinas were forbidden to lend money for interest to one another, Jews stepped in to provide much needed capital. But this was just about the only thing that Jews could do since Christians discriminated against Jews and barred them from nearly all other occupations, leaving business and trading as almost the only profitable venture they could engage in.

Additionally, due to their presence in almost every nation and their closeness to each other, Jews were able to develop a global-wide business network characterized by a very high level of trust among themselves. When they came to America in the 19th and 20th centuries, similar social and economic conditions — arising from the still evident anti-Semitism, albeit in much smaller proportions compared to Middle Ages Europe — made them focus on finance careers. They  also carried their closely-knit business networks with them.

L-R : James-Simons ,   Israel Englander and Larry Robbins,   Eddie Lampert,   Michael Steinhardt

3) Claims of Higher Intelligence Quotient (IQ)

Apart from claims of Jews simply being smarter, it is also asserted that Jewish parents would persistently encourage their children to aim for the best in every single thing they did. These parents reasoned that by being the very best, their children would at least be considered for some jobs and careers due to their outstanding abilities.

In addition to the three main reasons above, other theories and factors have been put forward to explain Jewish smartness in business and finance, with varying levels of scientific and evidential proof. They include:

4) Jewish culture has evolved to encourage a very strong focus on academic literacy and scholarship.

5) A Culture of Prudence and Financial Saving.

6) Sense of Togetherness and Love for One Another.

In conclusion, and on a light note, with 17 out of the best 24 hedge fund managers — and 8 out of the top 10 — being Jewish, maybe it is time we all requested Jews to teach us these things so that we can at least try be like them!

The Article was published with permission from www.octafinance.com

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