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As befits a former titan of Wall Street, GOP presidential hopeful Mitt Romney owns a portfolio as complex and impenetrable as a Goldman Sachs quantitative-strategies hedge fund. Indeed, he's invested in one of those.
The unlikely alumnus of Democratic Massachusetts' governor's mansion is by far the richest of the declared candidates seeking to succeed George W. Bush. Together with his wife, Ann, and their children, his wealth is estimated by his campaign to be between $195 million and $387 million. About $100 million of that is in trusts for the children.
It's not surprising that Romney, the wealthiest and most investment-savvy candidate for president, would have the most sophisticated portfolio. It has obviously been designed with considerable thoroughness, embracing assets like energy and real estate that have a low correlation with U.S. stocks and bonds.
Aside from cash balances of as much as $30 million in checking and money-market accounts, the Romneys' assets consist of IRAs and blind trusts established in 2003, when he was governor. Considerable wealth is tied up in Bain Capital, a venture-capital and buyout firm he founded in 1984. He retired from the firm in 1999 but retains profit shares in Bain entities through 2009.
Last week's financial-disclosure filing with the Federal Election Commission was the first disclosure of the holdings of the candidate's blind trusts, which are managed by Goldman Sachs under the direction of an attorney for Romney, R. Bradford Malt of Ropes & Gray.
These include numerous Goldman Sachs hedge funds and private partnerships, but not the faltering GS Global Equity Opportunities Fund, which last week was shored up with a $3 billion infusion of fresh capital.
Clearing out the conflicts
Malt told The Associated Press he had sold investments that conflicted with Romney's public stances, including some in European oil companies with ties to Iran. Romney has called on public-pension agencies to eliminate such investments.Malt said none of Romney's overseas investments is in a tax shelter.
Romney's filing was due May 15, but he was granted two delays to gather information from the numerous hedge funds and private partnerships in which he has been invested. Even after the delay, more than three dozen of them declined to release information about their holdings other than estimated valuations.
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Among these were numerous Goldman Sachs hedge funds and partnerships, each with assets pegged at between $1 million and $5 million, or simply $1 million-plus in the instance of his wife's investments. They included GS Global Opportunities Fund, GS Global Strategic Energy Fund, GS Quant and Active Direct Strategies Fund, GS Hedge Fund Partners and Hedge Fund Partners II.
Wife Ann held positions of more than $1 million in seven Bain Capital funds that would not reveal their holdings, including BC Partners VII and BC VII Coinvestment Fund. Brookside Capital Partners Fund, likewise with a $1 million-plus balance, also refused to reveal its holdings.
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Take a peek inside the checkbooks of the presidential candidates. Click here to read them all.
Hedge funds are notoriously secretive about their investments, claiming they reflect proprietary information. But as the meltdown in credit markets demonstrates, many of them own exactly the same things, especially those driven by quantitative models.In his New York Times blog Aug. 15, Floyd Norris quoted a Goldman Sachs report on the credit crunch saying, "To protect our investors, we will need to make more of an effort to make sure that our proprietary factors remain proprietary."
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Romney on the economyRepublican presidential hopeful Mitt Romney discusses his views on the economy with CNBC's Larry Kudlow.
He then quoted an unnamed hedge fund manager commenting, "Yeah, that's the problem: other quant managers stealing your highly proprietary factors of buying stocks with momentum or companies trading at low multiples of cash flow."
Continued: Individual holdings
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