Hedge-Fund World's One-Man Wealth Machine - WSJ

8/10/2019 Hedge-Fund World's One-Man Wealth Machine - WSJ

1/4


http://online.wsj.com/articles/hedge-fund-worlds-one-man-cash-machine-1401747769#printMode

See a sample reprint in PDFformat.

Dow Jones Reprints: This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients orcustomers, use the Order Reprints tool at the bottom of any article or visit www.djreprints.com

Order a reprint of this article now

MARKETS

Hedge-Fund World's One-Man Wealth MachineDavid Abrams Built His Fortune Effectively Going It Alone

June 2, 2014 6:30 p.m. ET

More on MoneyBeat

Billionaire Stays in Shadows

In the Back Bay neighborhood of Boston, one man is

building a moneymaking machine that rivals some of the

hedge-fund industry's biggest names.

Calls to his office go unreturned even from those eager to

fork over eight-figure sums, potential investors say. One

industry veteran referred to him as "a unicorn," as few

people have ever seen him.

The hedge-fund manager, David Abrams, has personally

become a billionaire, and earned billions more for his

wealthy investors, over the past five years running what is

effectively a one-man shop, according to company andinvestor documents reviewed by The Wall Street Journal

and people who have worked with him. His firm, Abrams

Capital Management LP, manages nearly $8 billion across

three funds and is discussing raising money for a fourth

fund that could help push its assets past $10 billion.

In an era of star investors who appear regularly on

television and talk up their ideas at hyped confabs, Mr.

Abrams, 53 years old, has never spoken at an event open

to the public.

"He probably would have preferred you not find him," said

Roger Brown, president of Berklee College of Music,

where Mr. Abrams is a trustee.

Abrams Capital's main funds have posted an average

annualized return of about 15% since its founding in 1999,

documents show, nearly double the average for hedge

funds tracked by HFR Inc. and triple the S&P 500 index,

David Abrams of Abrams CapitalAbrams Capital

By ROB COPELAND
http://blogs.wsj.com/moneybeat/2014/06/03/in-boston-secretive-hedge-fund-billionaire-stays-in-shadows/http://online.wsj.com/public/page/news-financial-markets-stock.htmlhttp://www.djreprints.com/http://online.wsj.com/public/resources/documents/Reprint_Samples.pdf


2/4



The Boston Billionaire

David Abrams has earned billions for his wealthy

investors.

Graduated from University of Pennsylvania ashistory major

Protg of hedge-fund manager Seth Klarman

including dividends.

The firm invests in a relatively small number of beaten-down companies at a time, mostly through stocks

at present, though it has also dipped into some of the more-talked-about fixed-income deals of recent

years, including the unwinding of bankrupt Enron Corp. Among its recent stockholdings have been

bookseller Barnes & Noble Inc., retailer J.C. Penney Co. and money-transfer firm Western Union Co.,

securities filings and investor documents show.

Mr. Abrams also is among the small group of investors that has taken a big bet on government-controlled mortgage companies Fannie Mae and Freddie Mac, wagering that the Obama

administration's plan to wind down and replace the entities will fail, according to investor documents.

The firm employs three analysts and a small back-office

staff, but Mr. Abrams approves all trades personally,

according to people that have worked with him. Other firms

of comparable assets can have hundreds of employees.

He also built his fortune with the equivalent of one hand

WSJ's Rob Copeland profiles David Abrams, thehedge-fund world's one-man wealth machine, whosemain funds have averaged a 15% annualized returnover the past 15 years. Photo: Abrams Capital.


3/4



Started Abrams Capital Management in 1999after leaving Klarman's firm

Returns from main fund have tripled returns ofS&P 500 in 15 years

Jazz fan

Part owner of the National Football League'sOakland Raiders

tied behind his back: His firm uses no leverage, or

borrowed money, and often sits on billions in cash. It

currently holds about 40% of its $8 billion under

management in cash, investor updates show.

Mr. Abrams got his start in 1988 at Baupost Group LLC,

also based in Boston. Run by Seth Klarman, Baupost is

one of the world's largest hedge-fund firms, with $27 billion under management.

The two remain friends, and Mr. Klarman's personal foundation has put money into Abrams Capital's

funds. Mr. Klarman described his protg as "smart as a whip."

"He loves a good puzzle and a good treasure hunt," Mr. Klarman said.

People who have worked with him said the University of Pennsylvania graduate who majored in history

is introverted and cerebral. The son of a stockbroker and psychotherapist and a father of two, he is an

avid follower of jazz music and fan of the band Earth, Wind and Fire.

Like Mr. Klarman, Mr. Abrams is known to be patient to the extreme. He will sit on a static portfolio for

months without making a move.

Investors in the firm, including institutions like Brandeis University, with an endowment of about $700

million, sometimes get scant information. Mr. Abrams's most recent quarterly letter consists of just six

paragraphs, one of which is a single sentence.

"He's not going to waste a nanosecond to impress you, or convince you, or argue with you," said Mr.

Brown of Berklee. "He knows what he thinks and if you ask him, he'll tell you. If you don't, he might just

sit there in silence."

Mr. Abrams likely collected more than $400 million last year on the back of a 23% return for one of hismain funds, according to Journal calculations based on his fees, performance and his personal

investment in the firm. He doesn't appear on lists of top-paid hedge-fund managers because his

performance figures are so closely guarded, but his estimated compensation last year would have put

him ahead of David Einhorn, Daniel Och and even Mr. Klarman, according to industry publication

Institutional Investor's Alpha.

A portion of his earnings came from a private-equity-style vehicle, which doesn't pay out gains until it is

unwound, and a handful of firm executives may have shared a small slice of his payday. The hedge

funds were up an additional 2% in the first quarter, investor documents show.

As a side gig, in 2007 Mr. Abrams was part of a group that bought a 20% stake in the National Football

League's Oakland Raiders. Forbes estimates the team's worth at $825 million, the NFL's least valuable

team. Before the purchase, he wasn't a big football fan but views the team as a distressed investment, a

person close to him said. The person said Mr. Abrams prefers to play squash at the University Club of

Boston.

Write to Rob Copeland at [email protected]

Copyright 2014 Dow Jones & Company, Inc. All Rights ReservedThis copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreementand by copyright law.

For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit
http://online.wsj.com/public/page/subscriber_agreement.htmlmailto:[email protected]://topics.wsj.com/person/E/David-Einhorn/115


4/4



www.djreprints.com
http://www.djreprints.com/

Hedge-Fund World's One-Man Wealth Machine - WSJ

Documents

Transcript of Hedge-Fund World's One-Man Wealth Machine - WSJ