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Red Sox Owner's Fund Gets Bloodied
By Brett Arends (Related)
Mutual Funds Columnist
5/7/2007 7:27 AM EDT
Click here for more stories by Brett Arends (Related)
Tom Wolfe calls them the new masters of the universe. The media goggle over their billion-dollar fees. For the top tier of hedge fund managers, the sky looks like the limit.
Yet, away from the headlines, one of the industry's legendary pioneers is quietly sinking toward crisis as half of his clients have lost money over the long haul.
How big is John W. Henry? He was a hedge fund king before anyone had heard of such a thing. He's been speculating on the Street with billions since the early 1980s -- when most of today's big shots were still in junior high, and an "alternative investment firm" was one that allowed chinos on Fridays.
For nearly 20 years, he left Wall Street trailing in his wake as he racked up huge profits for his clients and himself. Henry's managed futures firm used, and even pioneered, quantitative chart-based trading strategies to beat the market.
He also helped pioneer the infamous "two and twenty" fee schedule now used by every hedge fund boss worldwide, where they charge 2 percent just to handle your money and then rake off 20% of any profits.
Henry became a legend. He made so much money he was able to buy the Florida Marlins out of his own pocket and take them to a World Series victory. And then, most famously of all, he did the same with the Boston Red Sox.
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He's raised more money from casinos, tobacco, and oil and gas than any other candidate.
In keeping with TSC's editorial policy, Brett Arends doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships.
Arends takes a critical look inside mutual funds and the personal finance industry in a twice-weekly column that ranges from investment advice for the general reader to the industry's latest scoop. Prior to joining TheStreet.com in 2006, he worked for more than two years at the Boston Herald, where he revived the paper's well-known 'On State Street' finance column and was part of a team that won two SABEW awards in 2005. He had previously written for the Daily Telegraph and Daily Mail newspapers in London, the magazine Private Eye, and for Global Agenda, the official magazine of the World Economic Summit in Davos, Switzerland. Arends has also written a book on sports 'futures' betting.
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