Hedge Fund's Success Propels Connecticut Billionaire List To A Record

The three co-founders of a Greenwich hedge fund that fetched a controversial state investment last year emerged Monday as newly minted billionaires on the Forbes list, making the governor's $35 million payment look awfully smart.

Richest of the three new 10-figure barons is Clifford Asness, listed with a net worth of $3 billion. That's a very high mark for a new billionaire, and it reflects dramatic growth at AQR Capital Management, where Asness is founding principal.

It's nearly certain that Asness was already a billionaire but was overlooked by Forbes previously. David Kabiller and John Liew, co-founders at AQR, which has $175 billion under management, joined the list at $1 billion each. All three are listed as Greenwich residents.

Vince McMahon, co-founder of wrestling juggernaut WWE and husband of Linda McMahon, President Donald Trump's new Small Business Administration chief, rejoins the Forbes list of the world's billionaires. Vince McMahon, whose wealth is listed separately from Linda's, grappled his way onto the list in 2014, then fell off a year later as the WWE stock took a body blow.

Along with McMahon and the AQR trio, all 13 of the Connecticut billionaires listed in 2016 made the Forbes list again. That includes hedge fund magnate Paul Tudor Jones II, who was reported to have exited Greenwich last year in favor of a residence in Palm Beach, Fla.

The list marks a record 17 billionaires for Connecticut, which is sure to spark more debate about whether the super-rich are exiting the state over taxes, as many people contend.

The overall Forbes list is topped as usual by Bill Gates of Microsoft, with $86 billion, followed by familiar names Warren Buffett of Berkshire Hathaway at $75.6 billion and Jeff Bezos, whose $72.8 billion reflects a sharp rise in the value of Amazon.com.

Trump, who claimed to be worth $10 billion during the campaign, landed at $3.5 billion, down $1 billion from his 2016 value as New York real estate slumped. He's No. 544 in the world, down more than 200 spots, and No. 201 in the United States.

Still No. 1 in Connecticut is Ray Dalio, the co-CEO and principal at Bridgewater Associates in Westport, coming in with a personal fortune of $16.8 billion. That's up from $15.6 billion last year, but Dalio nonetheless fell from No. 25 to No. 26 among U.S. billionaires.

Steve Cohen comes in at No. 2 in Connecticut, with $13 billion as the principal of Point72 Asset Management in Greenwich, his family's fund. Cohen founded SAC Capital but had to exit the business of managing outside money at the end of 2013 after a series of securities fraud investigations.

Cohen moves down to No. 34 in the United States, from No. 30, after gaining just $300 million.

Jones is third on the Connecticut list, unchanged from last year at $4.7 billion. He falls to No. 125 on the U.S. list, down from No. 108.

The record list comes after some high-profile departures over the last couple of years, as two billionaires moved their residences from Greenwich to Palm Beach. That was viewed as an emblem of Connecticut's slipping fortunes as the home state of many people with big fortunes — a warning shot that enough was enough when it came to state taxes.

The debate over whether the gilded class is leaving because of state taxes is the hottest economic question in Connecticut. "It still remains a very serious concern to us," said Greenwich First Selectman Peter Tesei."

Gov. Dannel P. Malloy responded in 2016 with a budget that didn't raise taxes, instead lopping more than 2,000 state jobs.

Malloy's proposed budget this year would bring more deep state cuts, either in staffing or pay and benefits to public employees, along with a shift of hundreds of millions of dollars in costs to cities and towns. Again, the Democratic governor eschews state tax increases and again he faces harsh rebukes from the unions and other left-leaning activists who worked for his two elections.

Many of those same people also called Malloy's deal to give AQR an aid package of $35 million in November an outrage. With the incentive, mostly a $28 million, low-interest loan, AQR said it would keep its 540 employees on this side of the New York-Connecticut line and add as many as 600 in the next decade.

Is it an outrage for the state, while it's cutting basic human services, to give tens of millions of dollars to a hedge fund with $175 billion under management? No question about it, especially since Asness, the managing founder, has shown a significant libertarian bent in his lively blog posts and other writings.

Two years ago, Asness and an AQR colleague raised hackles with a research paper that argued that the global temperature trends over the last 125 years do not, on their own, support an alarmist view of global warming. Asness said climate change was real, but was nonetheless widely tarred as a climate change denier.

Asness, who goes by Cliff, has also supported gay marriage among many other causes. He was reported to be a lead funder of the #NeverTrump movement, though he has supported Republicans significantly.

Personal politics aside, how does Malloy's investment look now? Consider that a small handful of AQR managers could pay more than $100 million in state income taxes alone in a single year — and these hedge funds can and sometimes do move.

Distasteful and outrageous as they are, the two state handouts to keep hedge funds in lower Fairfield County (including $22 million for Dalio's Bridgewater in 2012) are the best investments Malloy has made for Connecticut taxpayers. The best ever.

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