Hedge Funds Sports Teams
The Ultimate Hedge Fund Buy: A Professional Sports Team
Hedge fund managers make a name for themselves with solid performance and winning portfolios, but how do they fare when they purchase professional sports teams. The pro sports team has become the ultimate status symbol for hedge fund managers as a fun investment that can be highly profitable. Although hedge fund managers often back winning teams (like the championship Boston Celtics or Red Sox) the teams often make out better than the owners, according to a recent article in BusinessWeek.
John W. Henry, founder of futures trader John W. Henry & Co., became the principal owner of the Boston Red Sox in 2002. Two years later the team won its first World Series in 86 years. Three years after that it chalked up a second championship. While the Sox were winning, the firm's assets were dwindling, falling to $319 million as of Apr. 15 from a peak of $3.4 billion in 2005.
James Pallotta, a Boston-based hedge fund manager who at his peak oversaw more than $11 billion, bought part of the Boston Celtics in December 2002. Six years later the basketball team won the National Basketball Assn. championship. In June 2009, following two years of losses, he closed his Raptor Global hedge funds.
The trend hasn't gone unnoticed by hedge fund investors. "Owning a team can be a function of ego, it is very high-profile, and it could prove to be a distraction," says Brad R. Balter, head of Boston-based Balter Capital Management, which farms out money to hedge funds. "As an investor, I have to consider that." Words to bear in mind for Steven A. Cohen, the billionaire hedge fund manager who is bidding for a minority stake in the New York Mets. Source
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