Leaning Out, Hedge Fund Billionaire-Style

by Alec MacGillis | March 7, 2014

There’s a lot of talk these days about the inclination of many professionals to “lean out”—to essentially take the opposite of Sheryl Sandberg’s “lean in” exhortation for women, and dial things back a bit, even if it means giving up some dough or status or a promotion. Heck, if the Congressional Budget Office is to be believed, the White House is encouraging “leaning out” with the new health care law, which makes it easier to get coverage without a full-time, benefits-providing job.

Well now, it appears, the lean-out trend has even hit that bastion of manic over-achievers: hedge fund titans. Just listen to the perspective and moderation in the approach that Paul Tudor Jones, one of the nation’s best known and most successful hedge fund manager, is now taking to his work, according to a prominent profile in Thursday’s New York Times business section. Jones, the Times reports, is “settling down,” as part of a “deliberate move to trade more conservatively, fewer big interest-rate and currency moves as central banks kept short-term rates near zero and more competition as the hedge fund universe has mushroomed.”

So what’s left when someone like Paul Tudor Jones—estimated net worth $3.7 billion, No. 130 on the Forbes 400—decides to take it down a notch? Well, other of life’s priorities come to the fore:

Lately, however, people are just as likely to talk about the dazzling four-and-a-half-minute Christmas light show at Mr. Jones’s 13,000-square-foot mansion in Greenwich, Conn., as they are about his big market scores.

How does one continue to make enough to live and pay the bills in the cutthroat world of hedge funds, once one has decided to throttle back a bit? Well, you get by:

In 2012, Mr. Jones cut the management fee for a new share class of Tudor BVI, reflecting investor concern about performance. The new shares cut the management fee to 2.75 percent from 4 percent while increasing the firm’s share of profits to 27 percent from 23 percent. Many hedge funds charge a 2 percent management fee and 20 percent of profits. William Spitz, the former vice chancellor for investments at Vanderbilt University, which has been a Tudor investor, said the firm’s fees were “quite high.” He said the firm responded to questions about the fees by arguing they were needed to pay for “a lot of highly compensated people, a large infrastructure to control risk, with a lot of back-office support and systems.”

Even the lower fee level of 2.75 percent is enough to bring the firm $283 million annually on the main fund alone.

Some lean-outers fall back to knitting, woodworking, or fly-fishing. Just like Jones:

He owns a $30 million hunting and fishing lodge in Maryland, another home in the Florida Keys and since 2002 he has leased a 350,000-acre eco-reserve in Tanzania, where he co-owns four high-end lodges.

Others turn to tending the spirit. Jones is right there with them, too:

A top donor to the University of Virginia, his alma mater, he gave $44 million for a sports and concert arena there named after his father, and in 2012 he and his wife, Sonia, a yoga enthusiast, gave more than $12 million for a center there for “meditation, yoga and mindfulness training.”

Of course, our best efforts aside, life still sometimes intrudes into the search for mindfulness:

Later that year, he was embroiled in an unsuccessful attempt to oust the college’s president.

Ah yes, that. Also, the $200,000 check to the unsuccessful presidential candidate. But generally, Jones is pretty much just sitting on the dock of the bay. Or rather, sitting in the Monticello-inspired mansion over the sound, which replaced an $11 million tear-down and has a 26-car garage to accommodate the occasional visitor.

“I guess as we’ve all grown older, we’ve become a little more erudite and a little more conservative,” said William Dunavant Jr., 81, a Memphis cousin of Mr. Jones and one of his earliest investors, who still has a substantial amount of his personal investments with him.

So take that, Sheryl Sandberg. In Greenwich, they know that what really matters in life isn’t just making money. That is, assuming you’ve already made a ginormous pile of money.

Postscript, 3 p.m: A reader notes that Jones' embrace of the lean-out ethic is highly ironic given the eye-opening thing he said recently about why women tend not to lean into high finance.

Source URL: http://www.newrepublic.com//article/116933/billionaire-john-paul-tudor-jones-leaning-out