George Soros of Soros Fund Management Made 650 Million
The Wall Street 100
By Stephen Taub, Nanette Byrnes, and David Carey
July 6, 1993
No. 1 GEORGE SOROS
Soros Fund Management
At least $650 million
How do you make $650 million in one year if youre not Mike Milken? Simple. First, start the year with about $800 million of your own money and other $4 billion of other peoples—nearly $5 billion in all under management. Then hire crack managers and traders who rack huge returns trafficking highly volatile currencies and derivatives instruments. Finally, charge hefty management and incentive fees. Result: Last year 62-year-old George Soross Quantum Fund was up 68.1% after fees; Quantum Emerging, up 57%; Quasar International, 55.7%; and Quota, 37.4%. Quantum and Quasar charge 1% management fees and 15% of the appreciation while the other two funds charge 1% plus 20%.
Moreover, Soros invests a big portion of his assets in currencies and index-linked derivatives—but never for long. He flits in and out of these instruments incessantly, rarely holding a position for more than a few days. As a result, he realizes capital gains on the vast bulk of the nominal returns he generates in a given year. Do the arithmetic and youll see that at a bare minimum, Soros extracted more than $400 million in profits from his personal hoard.
A conservative estimate of his share of his firms incentive fees tacks on another $200 million or so to the total. Finally, Soros awards himself all his firms management fees, which netted him about $50 million. Presto: $650 million, although his take might have been much higher. Today, Soross clutch of five offshore funds boats assets well over $7 billion, including a $525 million real estate fund he recently formed in partnership with Paul Reichmann, a former controlling shareholder with bankrupt Canadian real estate developer Olympia & York. This is not to be mistaken for Soross new $775 million partnership with British Land to invest in properties.
What does one do with so much dough? In the case of Hungarian-born Soros, help the desperate of Central and Eastern Europe and foster capitalism on on4es native soil and surrounding countries. A network of 20 foundations across Central and Eastern Europe organized most of his philanthropic activity. The first was opened in Hungary in 1984. He pledged $100 million to support scientific research in the Commonwealth of Independent States last year, donated $50 million to Bosnia and financed a $25 million revolving loan to buy heating oil that helped Macedonia survive the winter.
Source: Financial World, July 6, 1993
Illustration by Jeff Wong