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The biggest hedge fund donor this election: Why it stays so quiet

Robert Mercer
Andrew Toth | Getty Images
Robert Mercer

Secretive money manager Robert Mercer, who has donated roughly $19 million to conservative causes during this election cycle, has emerged as a central figure in the Donald Trump presidential campaign recently.

But the company where he is co-chief executive, Renaissance Technologies, may be an even bigger player in the current political topography.

So far this cycle, individuals affiliated with Renaissance have donated about $34 million either to candidates running for office or groups supporting them, according to records sorted by the Center for Responsive Politics. And while Mercer, who's so far given the most, has now thrown his support behind Trump (a move made after his preferred candidate, Ted Cruz, dropped out), Chairman James Simons and director Henry Laufer, who together have given nearly $14 million to Hillary Clinton and other liberal causes, are a powerful counterweight.

In hedge fund speak, that means that Renaissance could be approaching market neutrality.

Renaissance's overall bounty is nearly twice what's been given by affiliates of Paloma Partners, the Greenwich, Connecticut-hedge fund founded by one of Clinton's biggest supporters, and nearly three times what affiliates of Elliott Management — whose founder, Paul Singer, is known for his political activism — have given.

(It's worth noting that because some political campaigns and groups file their contribution information with the Federal Election Commission on quarterly, rather than monthly, bases, these figures are dated and, quite possibly, low. CNBC tallied the overall numbers using CRP's groupings of FEC filings as a starting point, and then added more recent and relevant individual contributions to the mix.)

Renaissance doesn't host political events at its offices, according to someone familiar with the matter, and the corporation itself doesn't give money to campaigns. But as a theoretical exercise, if each of its 290 employees made political donations – which they don't – the average spend would be about $118,000 per person. Multiple employees, including Mercer, who gave money to political causes and were contacted for this article either didn't respond to emails or phone messages or declined, through a spokesman, to comment.

Biggest Hedge Funds in Politics

Firm
Amount ($ given by executives & other fund affiliates)
Renaissance Technologies about $34 million
Paloma Partners about $18 million
Elliott Management at least $13 million
Citadel about $10.6 million
AQR about $2.8 million
Source: CRP, CNBC reporting for current cycle

Perhaps unsurprisingly, given their largesse, hedge fund executives dominate the pool of major donors involved in this election cycle, which encompasses this year and last.

S. Donald Sussman, a Clinton supporter who founded Paloma Partners, has donated nearly $18 million, according to CRP records; Singer has given more than $12 million, mainly to conservative causes.

Spokespeople for Paloma and Elliott had no comment.

The donations emanating from Renaissance, the Long Island, New York-based hedge fund that manages $30 billion in assets, entirely through algorithmic trading, are notable not just for their size, but for their bipartisan nature. Mercer, the second-biggest donor to any campaign or candidate this election cycle, has given the vast majority of his more than $19 million in total spending to conservative causes, according to the CRP's classifications. (He's outpaced only by Tom Steyer, the environmental activist and former hedge fund manager, who has given at least $38 million, predominantly to his own climate change-focused super PAC.)

But some of Mercer's current and former colleagues at Renaissance, who have primarily supported Democrats, have also given generously.

Simons, the Renaissance founder who is now chairman of the company's board, who along with his wife, Marylin, has given at least $10 million to various political groups. Of that, at least $7 million has gone to Priorities USA, which supports Clinton's presidential bid.

Laufer, a fellow Renaissance director, and his wife have given at least $2 million of their $3.6 million or more in political donations to the Priorities PAC.

Peter Brown, who is co-chief of Renaissance alongside Mercer, has historically supported Democrats, including Clinton when she was a senator from New York and Chuck Schumer, who is currently one of the state's senators. His wife, Dr. Margaret Hamburg, served as Food and Drug Administration commissioner for six years under President Barack Obama. But Brown, who has told associates privately that he's bothered by the high-profile political contributions from Renaissance, thinking it's bad for business, has done little in the way of campaign spending this season.

A woman answering the phone at Brown's East Setauket, New York, office Thursday said he would not be available for comment for this article and hung up. But in a late-June interview on CNBC, Simons brushed off the notion that political differences had any impact on business at Renaissance. "Bob has his opinions, Peter has his and I have mine, and it doesn't have anything to do with work," he said at the time.

Indeed, political differences don't appear to have hurt results at Renaissance, where computers do the trading. Year to date, the company's Institutional Equities Fund has returned 15 percent through August, making a standout in an industry where the average hedge fund is up just 3.5 percent, according to HFR figures. Even so, politics are a distraction to some hedge fund investors, who would prefer the stewards of their money to keep the focus exclusively on that.

As a money manager for pension holders, "you have a fiduciary duty to the mandate that's paramount, and to the extent that you are expressing your own view with money that you earned from people across the political spectrum, I think that it's just easier to sit out," said Jonathan Grabel, chief investment officer of the $14.5 billion New Mexico state pension fund. "To the extent you do something personally, don't draw attention to it. I do think there's a conflict inherent in that."

A CNBC assessment of some of the largest hedge funds by assets revealed a wide disparity in the amount of money given to political causes and the number of employees involved. At Renaissance, more than a dozen individual employees, directors, or other affiliates have given money this cycle, accumulating about $34 million in donations; at Och-Ziff, the fourth-largest hedge fund by assets in a recent Institutional Investor count, the total was a mere $52,000, according to a spokesman, generated, apparently, from just a handful of individuals, according to CRP records.

And some hedge fund executives are more aggressive than others in encouraging employees to participate in political fundraising. When Steve Cohen, the Point72 family office founder, was supporting New Jersey Gov. Chris Christie for president earlier this cycle, for instance, he invited employees and their spouses to attend campaign events he was hosting, recalls someone who was there at the time.

He also walked around the trading floor of his Stamford, Connecticut, headquarters, this person added, and asked portfolio managers for four-figure campaign donations. "It was easy to ignore an email, but a lot harder when he came directly up to your face and asked you," this person recalls. "I didn't hear anyone say no, but I did hear a lot of grumbling about it afterwards."


Peter Brown
Andrew Harrer | Bloomberg | Getty Images
Peter Brown

Corporations can solicit employee political contributions as long as their efforts don't constitute coercion, said Tara Malloy, deputy executive director at the nonpartisan Campaign Legal Center, and the law is clear-cut when it comes to encouraging donations to company PACs. But the questions become "more murky" when a CEO asks for contributions directly to candidates. "The FEC rules do not specifically address this situation," Malloy wrote in an email.

In his own email, Mark Herr, a spokesman for Point72, noted that the firm "encourages its employees to participate in the political process" and that "employees, including Steve, have supported candidates from both sides of the aisle." Herr acknowledged that Cohen had invited employees to fundraisers he was hosting, but added that "it has always been made clear to all invitees that their attendance or support is voluntary."

Ken Griffin, founder of the Chicago asset-management firm Citadel, has over the years invited a number of political candidates to speak to his employees, including Obama before he was elected and the Republican challenger in his 2012 re-election race, Mitt Romney.

Although Griffin himself has been an active campaign donor — most recently backing Republican presidential hopeful Marco Rubio — people who work there say there's no pressure to make contributions, and a spokesman noted that all political giving by Citadel employees is subject to a compliance review. (Such compliance concerns, which come into play when firms manage pension funds and other government money at the state or municipal level, were prominent in Goldman Sachs' recent decision to bar partners from contributing to federal campaigns for sitting state and local officials — including that of Indiana Gov. Mike Pence, who is Trump's running mate.)

At Renaissance, Mercer's recent $2 million donation to Make America Number 1, a super PAC supporting Trump, and the influential role reportedly played by his middle daughter, Rebekah Mercer, in installing Stephen Bannon and Kellyanne Conway as top Trump campaign officials this summer, have drawn great scrutiny.

Mercer himself, a quiet mathematician who never gives media interviews, has remained behind the scenes. But in his June interview on CNBC, Simons was more than willing to make a pitch for the Democratic presidential contender. "I'm a Democrat, so I'm certainly in favor of Hillary," Simons said. He then used a mathematical analogy to put down Trump, saying that he was "a wild man" who was "not a good investment no matter what you might think of his potential return."

— CNBC's Amanda Lasky contributed to this report.