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Raymond Dalio | Main | David ShawIsrael Englander Millennium Management Founded in 1989 $25.8 Million (what $1 million invested on |
day one would be worth now)
Israel (Izzy) Englander, the 64-year-old founder, chairman and CEO of New York-based hedge fund firm Millennium Management, is at heart a talent scout. Englander is unquestionably a skilled investor, but his true gift lies in his ability to find traders who are capable of making money the Millennium way -- "picking up nickels and dimes," as he says -- through arbitrage strategies, a risk-sensitive approach based on identifying pricing anomalies among securities and making a series of small, incremental bets. The son of Jewish parents who emigrated from Poland, Englander grew up in the Crown Heights neighborhood of Brooklyn and got his start trading stocks in high school. By 1976, having earned a BS in finance from New York University, Englander was trading from his own seat on the American Stock Exchange. He founded Millennium in 1989 as a partnership with $35 million and has grown the firm to more than $18 billion in assets, with annualized returns of 14.49 percent since inception for the firm's international fund. But he has faced challenges along the way. In 2003 the Securities and Exchange Commission and then-New York State attorney general Eliot Spitzer took action against Millennium, alleging that between 2000 and 2003 one of the firm's traders had engaged in the practice of mutual fund timing -- trading in and out of mutual funds outside open market hours -- and disguised the firm's identity while doing so. Millennium agreed to pay $180 million to settle with the SEC in 2005, neither admitting nor denying guilt. Then, during the market crisis of 2008, Millennium's assets shrank to $11 billion when liquidity-starved investors pulled their cash from the firm -- even though the fund and its offshore counterpart ended up almost flat on the year, compared with the 19 percent loss suffered by the average hedge fund, according to Hedge Fund Research. To resolve those crises, Englander put his famous talent-finding skills to work, investing significantly in compliance operations and hiring a marketing and public relations person for the first time. Millennium not only survived, it thrived, and today Englander is seeing some...