When does a hedge fund chief forget to hedge his bets? When he’s writing a check to a political campaign.
It may seem counter-intuitive, but that’s the trend line that leaps out when examining the political contributions of some of the nation’s top names in the hedge fund world, compared to the same data for CEOs of big Wall Street banks.
For starters, here's how the big players on Wall Street contribute money.
The campaign contributions of Goldman Sachs CEO Lloyd Blankfein are typical of a Wall Street executive: He gave $4,800 to Democrats and the same amount to Republicans. In addition, he coughed up $5,000 for Goldman Sachs’ political action committee, which itself contributes money to both Democrats and Republicans.
Over at JPMorgan, something of the same pattern exists, although CEO Jamie Dimon tilts toward the Democrats: He contributed $8,000 to Democratic candidates, $4,800 to Republicans and $10,000 to JPMorgan’s own political action committee.
In the hedge fundworld, George Soros, a well-known liberal activist, apparently doesn’t believe there's any need to hedge his political bets: He coughed up $126,800 for Democrats and not a penny for Republicans.
It's the same story with Steve Cohen of SAC Capital: He gave $66,400 to Republican candidates, but nothing to the Democrats.
This pattern doesn’t hold in every case.
There are some Wall Street executives who appear to have given solely to one party: Brian Moynihan of Bank of America has apparently only given to Democrats.
And there are hedge fund executives who balance their contributions, such as billionaire John Paulson, who doled out cash to Republican PACs and Democratic campaigns. But the opposite happens often enough that it feels like a pattern.
What’s behind it? Only the CEOs can say for sure.
But I have a guess: Wall Street executives these days are running large, highly visible public companies, and they know they’re under enormous scrutiny from the media, the public and Congress itself. They can’t afford to make political enemies.
So even if they prefer one party over the other personally, they take a tactical approach and spread the money around. And they make sure to target the key committee chairs and people who oversee their industry on the Hill.
But if they're hedge fund leaders, CEOs of private, highly secretive and often closely held firms, they don’t operate that way.
This may be a sweeping generalization, but culturally, hedge fund CEOs are less diplomatic and more autocratic. And so their contributions reflect their personal politics, even though putting all your chips in one party's "basket" might not be the smartest tactical play in politics.