Hedge Funds Bet On Presidential Race

Source : The Business Times, December 3, 2007

(WASHINGTON) Wealthy hedge fund managers closely guard their investment strategies, but mounting political donations reveal how some 'hedgies' are betting in the crowded US presidential race.

Hedge funds' campaign donations have skyrocketed in recent years as trading profits have ballooned and the industry has lobbied Congress aggressively this year against raising taxes on managers' often multimillion dollar earnings.

Democratic White House hopefuls have been more successful so far, compared with their Republican rivals, in winning funds.

The top-grossing recipient is Democratic Senator Christopher Dodd who garnered US$714,500 in donations from the hedge fund industry in the first nine months of the year, according to the Center for Responsive Politics (CRP).

The CRP says Republican presidential aspirant Rudolph Giuliani holds second place with donations of US$565,000 followed by Democratic contenders Barack Obama, Hillary Clinton and John Edwards.

'They want to make friends in Washington and campaign contributions are a good way to do that,' said Massie Ritsch, a spokesman for the research centre.

Mr Ritsch pointed out that Mr Dodd is charged with overseeing the industry because of his chairmanship of the powerful Senate Banking Committee while Mr Giuliani, a former New York mayor, has strong ties to the city where many hedge funds are based.

Paul Singer, the founder of the US$9 billion hedge fund Elliot Associates, is one of Mr Giuliani's backers and has also made a corporate jet available to him.

Federal Election Commission records show Mr Singer has made a maximum individual donation of US$4,600 to Mr Giuliani's campaign this year. Elliot Associates's staff have stumped up a combined US$200,000. Mr Singer became an advisor to Mr Giuliani earlier this year.

Gregory Chase, who runs Chase Capital Management, says he has spent about US$500,000 of his own money promoting Democrat Mike Gravel, a former senator.

'I've been very unhappy with the United States foreign policy and its dependence on foreign oil over the last few years,' Mr Chase explained.

The currency trader can spend as much as he wants because he is acting independently of Mr Gravel's official campaign and is not bound by US campaign laws, like Mr Singer, which cap donations.

Mr Chase has placed advertisements in USA Today, The New York Times, The Washington Post and other major newspapers in support of Mr Gravel. -- AFP