George Soros of Soros Fund Management Made 650 Million
October 11, 2005
Financial World
The Wall Street 100
By Stephen Taub, Nanette Byrnes, and David Carey
July 6, 1993
Page 40
No. 1 GEORGE SOROS
Soros Fund Management
At least $650 million
How do you make $650 million in one year if you’re not Mike Milken? Simple. First, start the year with about $800 million of your own money and other $4 billion of other people’s—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 Soros’s 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 you’ll 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 firm’s incentive fees tacks on another $200 million or so to the total. Finally, Soros awards himself all his firm’s management fees, which netted him about $50 million. Presto: $650 million, although his take might have been much higher. Today, Soros’s 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 Soros’s 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 on4e’s 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
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