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Tom Steyer Mastered Markets and Now He Wants to Topple Trump

July 10, 2019, 12:46 PM UTC

Tom Steyer has the sort of pedigree that’s been successful in American politics for generations.

The son of a lawyer, he was raised on Manhattan’s Upper East Side, attended boarding schools and then Yale and Stanford universities. He learned merger arbitrage at Goldman Sachs Group Inc. under the tutelage of future U.S. Treasury Secretary Robert Rubin, before starting his own hedge fund.

He grew San Francisco-based Farallon Capital Management into one of the world’s most successful investment managers, skillfully navigating the 1987 market crash and notching a steady average annual return of 17% for two decades. By the time Steyer stepped back in 2012 to devote himself to philanthropy and Democratic politics, the firm oversaw $20 billion. He’s now worth $3.1 billion, according to the Bloomberg Billionaires Index.

Steyer, 62, on Tuesday announced that he is jumping into the 2020 presidential contest and is prepared to spend an additional $100 million to win the White House. He spent an unprecedented $230 million through his political action committee to help beat Republicans in the last three election cycles. Last year, over the objection of leading Democrats, he unleashed a nationwide campaign calling for the impeachment of President Donald Trump.

Hot Button

Some analysts questioned the likelihood of an ultra-wealthy candidate gaining much traction among Democrats at a time when income inequality is such a hot-button issue.

“There’s not much of a path to victory for a candidate identified with white-collar, Wall Street interests,” Josh Pacewicz, a Brown University sociology professor, said in an email interview.

The key for Steyer would be distinguishing himself in some other way, Pacewicz added. “Of course, the other question would be whether any new candidate could distinguish themselves in such a crowded field.”

Some of Steyer’s rivals for the Democratic nomination were more blunt.

“I like Tom. He is a good guy. He’s a friend of mine,” Vermont Senator Bernie Sanders said in an interview with MSNBC. “But I’m not a great fan of billionaires getting involved in the political process.”

Elizabeth Warren, the liberal senator from Massachusetts who has eschewed contributions from wealthy donors, also weighed in yesterday. “The Democratic primary should not be decided by billionaires, whether they are funding Super PACs or funding themselves,” she tweeted.

Managing Risk

It’s a puzzling decision for Steyer, whose prior career was about managing risk. He started Farallon with $15 million and soon earned a reputation as a conservative and reliable steward of money. He shunned leverage and deployed capital across mainstream asset classes such as corporate and government bonds and blue-chip stocks. And taking a page from his Goldman days, Farallon bet on the shares of companies in the midst of deals.

Steyer, who was a hands-on money manager, was careful to stay liquid and wasn’t adverse to holding sizable positions in cash when he sensed danger in the market. Farallon came through the crash of 1987 up 3.2%.

During his tenure at Farallon — he was also a managing director at Hellman & Friedman, the San Francisco private equity firm led by the late Warren Hellman — Steyer was a sphinx. He rarely gave interviews and almost never appeared on television.

Yet since quitting the investing business six years ago, he’s become quite comfortable taking the kinds of risks he would have shunned in his prior life. He’s become a fixture on cable news shows, lambasting Trump as a “clear and present danger” who can’t be trusted with the nuclear button. And he’s accused the president of rigging the system to benefit billionaires like himself.

Much of his activism is driven by a belief that climate change poses an existential threat to humankind. He’s donated millions to climate change policy research programs at Stanford and hasn’t been shy about decrying the very corporations that he used to invest in.

“I think people believe corporations have bought democracy, that politicians don’t care about or respect them,” he said Tuesday in a video announcing his candidacy.

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