Barack Obama reaped millions in donations from prominent hedge fund managers in 2008.
Steve Cohen; Dan Loeb; Cliff Asness — they loved him.
But the 2010 election cycle shows a massive swing to the right for the hedge fund crew.
The WSJ reports there has been a clear,
[S]hift in political allegiance within the world of hedge funds… Managers and employees of hedge funds directed a majority of their contributions to the GOP in the 2009-2010 election season, a pattern not seen since 1996, when the industry was much smaller.
Democrats received the biggest share of donations from hedge-fund managers for most of the past two decades.
Between 1990 and the 2008 election, hedge fund managers and their staff donated roughly $40 million to election candidates, with about 66% of that dispatched to the Dems. But in the 2010 election cycle, out of $11 million in total contributions, 53% of donations by hedge funders went to Republicans.
The reasons for the change? Obama’s populist attacks on Wall Street, including singling out of hedge funds for their role in the financial crisis; Democrat attempts to bump up tax bills; concern about the surge in government spending and rising deficits.
And two examples of the new Republican supporters? Third Point and SAC chieftans, Loeb and Cohen.
A Shift at SAC, Third Point
Both Loeb and Cohen were long-time and loyal supporters of the Democrats. But since Obama took office, their fiscal support for the party has plunged.
Loeb, a registered Democrat, “was one of the biggest Obama fund-raisers in 2008, rounding up $200,000 for him [and] in the decade prior, Mr. Loeb and his wife donated $250,000 to Democrats and less than $10,000 to Republicans,” the WSJ said.
But since then, Loeb has offered $468,000 to the GOP. He gave the Dems a paltry $8,000 in comparison.
As for Cohen he has “previously been a big Democratic supporter, regularly giving the maximum allowable to Democratic legislators in his home state of Connecticut,” and spent $500,000 on Democrats in 2008.
But last year Cohen decided to “direct contributions to GOP campaign coffers and to pro-Republican groups that could raise and spend unlimited amounts.” He gave Republican Governors Association alone $1.5 million.
And Cohen was doing more than just giving cash; he also gave time. Remember that GOP mid-term strategy meeting he hosted last year?
Cliff Assness of AQR. Historically he’s been a Republican man, but his staff haven’t been — they’ve always favoured the Dems. But last year, Assness own donations surged and his workers “all but stopped their donating to Democrats,” the WSJ said. The result — $550,000 for Republicans, and $3,000 for Dems.
Bruce Kovner of Caxton Associates. He wasn’t a massive donor before he attended that meeting at Cohen’s home. He donated $4,600 to GOP hopefuls in ’08, then in 2010, he gave $615,000 to the GOP.
John Paulson of Paulson &Co. He and his troops “had given about equally to the two parties in 2008. But in 2010, he and his employees gave three times as much to the GOP as to Democrats.”
Ken Griffin of Citadel. He’d given equally to each side in ’08. In 2010, $1.8 million went to Republicans from the Griffins. The Dems got $2,400.
Of course, not everyone has jumped ship. Marc Lasry of Avenue Capital is still with Bam: “I’m still a huge supporter” he told the WSJ, and he plans to fundraise for him again.