The Big Split: Why the Hedge Fund World Loved Obama in 2008- and Viscerally Despises Him Today
In May 2007, when Barack Obama was but an upstart challenger of Hillary Clinton, he attended a gathering of several dozen hedge fund managers hosted by Goldman Sachs at the Museum of Modern Art in New York. It was not a fund-raiser, just a chance for Obama to introduce himself to the investment wizards who had helped turn the hedge fund sector into the most lucrative and alluring corner of the financial universe. And the first question for Obama was as blunt as one would expect from this crowd. “If you’re elected president,” asked one guest, “what will you do to the taxes on the people in this room?” “I’ll raise them,” Obama fired back. “Which I admired,” recalls one of the attendees, Leon Cooperman, head of Omega Advisors. “And half the guys in that room voted for him.”
Obama surely knew that brusque candor would serve him well. He had gone to college and law school with these hyper-successful types and had raised money from some of them for his 2004 Senate run. He proceeded to rake in large sums from them for his presidential effort—$1.5 million, more than double John McCain’s take. This was in part because savvy investors like to pick winners, and, as the race developed, Obama’s campaign looked like a winner. But many fund managers also felt a personal connection with Obama. Just as they had carved out a successful niche within finance by thinking big and against the grain, Obama had risen by promising to transcend conventional bounds of race and politics. “They loved the guy,” says a Washington lobbyist who has represented the hedge fund industry. “He was an exciting, bright guy—like they are. He went to the best schools because he was the best student, not because daddy got him in there. Many of them are the first generation to have wealth, and they view it from a meritocratic standpoint—they made a phenomenal amount of wealth and they feel they earned it. They felt that he’s earned his success as well. It resonated with them.”
Four years later, that bond is broken. The hedge fund community has overwhelmingly shifted its backing to the Republicans: Mitt Romney has so far outraised Obama by a four-to-one ratio among hedge fund employees, pulling in more than $500,000—not to mention the seven-figure checks his super PAC has received from several top fund managers.