‘Alpha’: Donor’s Investment Plan

PRESS CLIPPINGS

The billionaire industrialist Eli Broad wants to double the size of his foundations’ assets in the next three years, in large part by making shrewd investments, writes Institutional Investor’s Alpha magazine (September/October).

Mr. Broad, whose fortune is estimated to be $5.5-billion, has three foundations now worth $1.4-billion, the magazine says.

For his investments, Mr. Broad is putting 20 percent of the foundations’ money in hedge funds, which allow managers to sell stocks “short” — bet against them by borrowing them, selling them, and then rebuying them, hopefully at a lower price — as well as buy stocks that they expect will rise in value.

Mr. Broad’s hedge-fund investments have beaten the Standard and Poor’s 500 index by an average of 7 percentage points a year since 2002, the magazine says. The overall portfolio of his foundations has grown by an average of 15 percent a year.

Mr. Broad does not get involved in day-to-day decisions by his investment managers, says the magazine, but he must approve the hiring of anybody who is managing his money. “Eli’s reputation as a very demanding, impatient, and accomplished individual is correct,” says Peter Adamson, who oversees Mr. Broad’s investments.

Hedge-fund managers like getting Mr. Broad’s money in part because he commits large sums and does not demand daily or weekly updates on the performance of his money. But they also like his insights, says the magazine. “I have never met anybody who has as quick a mind and is as inquisitive as he is,” Glenn Dubin, a hedge-fund manager, said.

The article is available to the magazine’s subscribers at http://institutionalinvestor.com