Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Hedge fund managers stung by 'class warfare' rhetoric

Hedge fund managers stung by Obama

Hedge fund investments are finally outperforming, but the public image of their managers is taking a beating.

President Barack Obama called the group "society's lottery winners" last week, noting that the top 25 earning hedge fund managers made more in 2014 ($11.6 billion) than the roughly 158,000 kindergarten teachers in the U.S. did combined ($8.5 billion).

Presidential hopeful Hillary Clinton cited the same statistic in joining Obama's call for ending carried interest tax treatment, echoing what she said in her first campaign speech: there's "something wrong" when "hedge fund managers pay lower tax rates than nurses or the truckers."

It's not just politicians attacking investment managers.

The American Federation of Teachers' president, Randi Weingarten, cited the kindergarten comparison in speeches this month, for example, and a group called the Hedge Clippers have targeted New York-area billionaires like Paul Singer, Bill Ackman and Paul Tudor Jones. They argue that the investors are hurting the poor through some investments and political donations, protesting this year at industry events and near the managers' homes and offices.

All that makes some hedge fund managers fume. (Tweet this)

One prominent investor—who, like others, asked to remain anonymous given the divisive subject—called the rhetoric "class warfare" and noted other times in history, including before World War II, when financial speculators were unfairly blamed by politicians.

"Instead of the Jews, it's the hedge fund managers," the person said.