hedge fund managers

DealBook Column: Leon Cooperman Lashes Out in Letter to President Obama

December 6, 2011 by NewsMaker Leave a Comment

Peter Foley/Bloomberg NewsLeon Cooperman says he did not write “on behalf of Wall Street.”

Leon Cooperman, a 68-year-old Wall Street veteran, says he is for higher taxes on the wealthy. He would happily give up his Social Security checks. He voted for Al Gore in 2000. He says the special treatment of investment gains, or so-called carried interest, for private equity and hedge fund managers is “ridiculous.” He says he even sympathizes, at least to some extent, with the Occupy Wall Street protesters.

And yet, Mr. Cooperman, a man with a rags-to-riches background who worked at Goldman Sachs for more than 25 years in the 1970s and 1980s before starting his own hedge fund, Omega Advisors, which has minted him an estimated $1.8 billion fortune, is waging a campaign against President Obama.

Last week, in a widely circulated “open letter” to President Obama that whizzed around e-mail inboxes of Wall Street and corporate America, Mr. Cooperman argued that “the divisive, polarizing tone of your rhetoric is cleaving a widening gulf, at this point as much visceral as philosophical, between the downtrodden and those best positioned to help them.”

He went on to say, “To frame the debate as one of rich-and-entitled versus poor-and-dispossessed is to both miss the point and further inflame an already incendiary environment.”

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The letter comes as President Obama is planning to give a speech on Tuesday in Osawatomie, Kan., about the economy and the middle class, following in the path of President Theodore Roosevelt, who campaigned a century ago in that very city against the wealthy and big business.

Mr. Cooperman’s complaint has less to do with the substance of taxing the wealthy than it does the president’s choice of words in promoting it, an emphasis that he says is “villainizing the American Dream.”

While many executives have complained about what they perceive as the president’s antibusiness bent, Mr. Cooperman’s letter has gained credibility and attention in political and business circles because of his own seemingly liberal stances on taxes and the like.

Mr. Cooperman, in an interview, said he had been deluged with hundreds of e-mails and phone calls about the letter, “99.9 percent of it positive.”

“I came from nothing,” he said, explaining how he grew up in the Bronx and went to P.S. 75. “I have lived the American Dream. I don’t want to be constantly attacked.”

He was quick to say that he did not write the letter “on behalf of Wall Street.” Indeed, Mr. Cooperman’s view of the financial industry is dimmer than you might expect from someone who made his fortune in it. “Wall Street screwed up,” he said matter-of-factly. “They did things they shouldn’t have.”

He said he decided to write the president a letter because he became convinced that Mr. Obama was “villainizing success.” He added, “We are supposed to admire success.”

Of course, his letter has not gone over well with some audiences — he has been called a “whiner” and worse. On Daily Kos, a left-leaning commentary site, one member wrote: “He simply embarrasses himself with this rant, and seems more interested in complaining about the points Obama is making that aren’t in his personal economic interests than in providing any real solutions to our problems.”

Mr. Cooperman acknowledged that he had received at least one negative e-mail. “I got one that said, ‘Be very careful when you start you car in the morning because there might be a bomb in it.’ ” He tried to laugh it off.

Some critics of Mr. Cooperman’s letter say President Obama has not been hard enough on big business and questioned what it was that the president has said that has drawn the ire of the business community.

“What pushed me over the fence was the president’s dialogue over the debt ceiling,” Mr. Cooperman said, explaining that just when it seemed like a compromise was near, President Obama went on national television and pressed harder on “millionaires and billionaires,” a phrase that has stuck in the craw of many of the elite. For example, Mr. Cooperman zeroed in on what he described as the president’s belittling remarks about taxing the wealthy: “If you are a wealthy C.E.O. or hedge fund manager in America right now, your taxes are lower than they have ever been. They are lower than they have been since the 1950s. And they can afford it,” the president said back in June. “You can still ride on your corporate jet. You’re just going to have to pay a little more.”

The president’s tone can be debated. Some people would argue it is simply factual, others contend that it is dripping with derision.

Mr. Cooperman acknowledges that, in the debt ceiling debate this summer, it was as much the fault of Republicans and House Speaker John Boehner’s inability to gain support for a compromise as it was the Democrats that a deal did not get done. And Mr. Cooperman accepts that taxes are indeed at record lows.

But he says the president could do a better job of pressing for higher taxes on the rich without “the sense that we’re bad people.” He added, “I pay federal income tax. I don’t have any tax dodges.” He paused, before saying, “Most people I know are prepared to pay more in taxes as long as it’s spent intelligently.”

He added that he understood the politics of what he called “class warfare.” “Now, I am not naïve. I understand that in today’s America, this is how the business of governing typically gets done — a situation that, given the gravity of our problems, is as deplorable as it is seemingly ineluctable.”

Mr. Cooperman said he personally had been advocating adding a 10 percent tax surcharge on all incomes over $500,000 for the next three years. He also advocates that the military “get out of Iraq and Afghanistan” and that every soldier should be “given a free four-year education.” His personal “platform” — he insists he is not running for any office — also includes setting up a peacetime Works Progress Administration to rebuild United States infrastructure; freezing entitlements; raising the Social Security retirement age for full benefits to 70 “with an exception for those that work at hard labor”; adding a 5 percent value-added sales tax; and “tackling health care in a serious way,” among other things.

Mr. Cooperman, who recently signed the Giving Pledge, Bill Gates’s and Warren Buffett’s effort to press the world’s billionaires to give away at least half of their wealth, said he felt he came into his money honestly and said proudly, “I spend more than 25 times on charity what I spend on myself.” Asked whether he had received any response from the president for his letter, he replied with a chuckle, “I’m not optimistic I’ll hear from him.”

Article source: http://feeds.nytimes.com/click.phdo?i=9094c3e3753efc8414a28dc25326e28d

DealBook: Caught in a Wide Web, a Trader Faces Prison

October 12, 2011 by NewsMaker Leave a Comment

John Marshall Mantel for The New York TimesMichael A. Kimelman, with his wife, Lisa Kimelman, exits Federal District Court in Manhattan on Wednesday.

Last Friday, on a crystalline autumn afternoon, Michael A. Kimelman sat in the backyard of his home in Larchmont, N.Y. His toddler son was perched on his lap, sucking on a pacifier. His older son played baseball with a friend, while his wife and daughter gawked at 10 fresh-egg producing hens housed in their new chicken coop.

It was a vision of suburban bliss, save one grim fact: Mr. Kimelman is on his way to prison.

At the Federal District Court in Manhattan on Wednesday, a judge sentenced Mr. Kimelman, a 40-year-old former trader convicted of insider trading, to two and a half years. He could have avoided prison by accepting a plea deal, but had rejected the offer and took his case to trial. In June, a jury found him guilty.

“This is a serious crime,” said Judge Richard A. Sullivan in a courtroom filled with Mr. Kimelman’s family, neighbors, and college fraternity brothers. “When people engage in this kind of conduct and get caught, they will get punished.”

Two years ago, Preet S. Bharara, the United States attorney in Manhattan, brought charges against 26 defendants in a seven-year insider trading conspiracy. At its center was Raj Rajaratnam, who once managed $8 billion at the Galleon Group and was among the world’s wealthiest hedge fund managers. He was convicted at trial, and prosecutors have asked for a prison term of as many as 24 years.

On Thursday, a judge will sentence Mr. Rajaratnam and is expected to hand down the longest prison term ever for insider trading.

But in Mr. Rajaratnam’s shadows lurked a mostly anonymous network of corporate executives, lawyers, consultants, and traders who exchanged confidential information about publicly traded companies. Twenty-four have either pleaded guilty or been convicted; one remains a fugitive.

Of the 13 who have received sentences, their average term has been three years.

The government placed Mr. Kimelman, a 40-year-old journeyman trader, at the outer edge of Mr. Rajaratnam’s insider trading web. His role in the case was marginal enough that prosecutors offered Mr. Kimelman a deal shortly after his arrest in 2009: Plead guilty to a charge of participating in the conspiracy and receive no prison time, only a sentence of probation.

“Of course I have regrets about not pleading guilty; I could’ve ended this ordeal two years ago,” said Mr. Kimelman in an interview at his home last week.

“But at the same time, I wouldn’t have been able to look myself in the mirror if I admitted to doing something that I didn’t do.”

Mr. Kimelman grew up in a comfortable, middle-class home in Tarzana, Calif., a town in the San Fernando Valley north of Los Angeles. He went east for college, graduating from Lafayette College in Pennsylvania, and then finished near the top of his class at the University of Southern California’s law school.

He landed a job practicing corporate law at Sullivan Cromwell, one of the country’s most prominent firms, but found the work uninspiring.

He had a growing interest in the stock market, and with the bull market raging in the late 1990s, he left law.

“At S.C., I was working 100 hours a week and sleeping under my desk,” Mr. Kimelman said. “Trading stocks seemed like a better life.”

He pursued a career in the fast-money world of “prop shops,” or proprietary trading firms, where dozens of traders buy and sell stocks with the firm’s money. The traders then split their profits with the firm, typically 50-50.

Though Mr. Kimelman lived comfortably, he was hardly a Wall Street titan. In his best year, Mr. Kimelman said he earned about $400,000 and never had more than $1 million in the bank.

In 2008, Mr. Kimelman teamed up with a friend, Emanuel Goffer, to form their own proprietary trading firm, Incremental Capital. They needed seed money to start the business, so they looked to Emanuel’s brother, Zvi Goffer, a fast-talking trader from Brooklyn. Zvi had recently landed a coveted trading job at Galleon working under Mr. Rajaratnam.

Zvi Goffer held out the promise of Mr. Rajaratnam investing $10 million into Incremental and getting access to Galleon’s research.

Aligning with Galleon and Mr. Rajaratnam, who was considered one of Wall Street’s savviest stock pickers, would have been a huge coup for Incremental.

“It’s very much who you know on Wall Street,” Mr. Kimelman said. “Some guys do their own work, but there is also lots of piggybacking off of other people’s stock ideas.”

Mr. Kimelman met Mr. Rajaratnam once while visiting Zvi Goffer at Galleon’s office. They shook hands, exchanged niceties. But Mr. Rajaratnam never put money into Incremental, and Galleon soon fired Zvi for poor performance. Zvi, nicknamed “Octopussy” because his arms reached into so many sources of information, joined Incremental and promised to use his contacts to help build the firm.

“Some guys under-promise and over-deliver,” Mr. Kimelman said. “Zvi was the exact opposite.”

At 5:30 a.m. on Nov. 5, 2009, a half dozen federal agents showed up Mr. Kimelman’s front door. While the agents searched the house with flashlights, his wife, Lisa, sequestered the children in the master bedroom. They handcuffed Mr. Kimelman and drove him away.

Federal prosecutors accused Zvi Goffer of paying nearly $100,000 in cash bribes to get secret information about big merger deals from two corporate lawyers. They said that Emanuel Goffer and Mr. Kimelman, as part of the conspiracy, knew about Zvi Goffer’s scheme. They also charged Mr. Kimelman with illegally trading in shares of 3Com in 2007.

During trial, the government played secretly recorded conversations during which Zvi Goffer arranged with Mr. Kimelman to meet in person rather than discuss things over the phone.

On 3Com, prosecutors showed phone records indicating that Zvi Goffer, who had received an illegal tip that the company was a takeover target, spoke with Mr. Kimelman for 25 minutes on the night of Aug. 7.

On Aug. 8, trading records showed that Mr. Kimelman bought a large block of 3Com stock just before a deal was announced. He earned about $250,000 in profits on the trade, the government said.

Mr. Kimelman’s lawyers blasted the government’s case, arguing that it was based on innuendo and guilt by association. They argued that even if Mr. Goffer told Mr. Kimelman to buy 3Com, there was no evidence that Mr. Kimelman knew that the recommendation was based on illegal information.

“They charged Michael Kimelman with insider trading, yet they have not brought a single witness to this courtroom to say, ’I told Mike about an insider,’” said Michael Sommer, a lawyer for Mr. Kimelman at Wilson Sonsini Goodrich Rosati, in his closing statement. “And with tens of thousands of recordings, text messages, instant messages, e-mails, there is not one which shows the slightest misconduct by this man.”

Judge Sullivan acknowledged that the jury’s decision was a close one.

“I thought it was a verdict that could go either way,” said the judge during a pre-sentencing conference.

In recent weeks, Mr. Kimelman has spoken with about dozen former prisoners about their incarcerations and received a range of advice. Find something to keep you busy so don’t go crazy. Keep your head down and you won’t get beat up.

Lisa Kimelman is a former Martha Stewart employee who now runs her own catering business. She has kept a sense of humor, writing a story in the October issue of Elle magazine about selecting a wardrobe for her husband’s trial. But Ms. Kimelman, the daughter of Michael H. Moskow, the former longtime president of the Federal Reserve Bank of Chicago, is also bitter about her family’s plight.

“My father worked for three presidents, and I was a White House intern,” Ms. Kimelman said. “I believed in our government, and it never occurred to me that our system would fail somebody.”

They have yet to tell their children, ages 7, 5 and 2, that their father is going to jail. Mr. Kimelman said that they wanted to learn his exact sentence before delivering the news. He worries about his family’s financial situation; his savings are wiped out and he is in substantial debt. Within 60 days, he must report to the Bureau of Prisons, which will assign him to a correctional facility.

Last week, as a reporter asked Mr. Kimelman his feelings about going to jail, Cam, his red-headed, freckled 5-year-old boy, ran up to him.

“Daddy, daddy, can I go inside and play Wii?” he asked.

“It’s the kids,” Mr. Kimelman said. “It’s the kids that kill you.”

Article source: http://feeds.nytimes.com/click.phdo?i=e47288e8990dbaf649cb57b1d59d22cb

Filed Under: Business News Tagged With: hedge fund managers, mr rajaratnam, raj rajaratnam

Essay: Not-So-Representative Investors

July 10, 2011 by NewsMaker Leave a Comment

So I am thrilled by a recent learned paper that says quite a lot about money and the people who make it.

The study, “Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives,” is a real eye-opener. Using the financial disclosures of politicians, the research team built model portfolios and charted their performance. They found that House members “earn statistically significant positive abnormal returns,” outperforming the market by 6 percentage points.

Senators do even better, the authors say, citing their own earlier research from 2004. Senate portfolios “show some of the highest excess returns ever recorded over a long period of time, significantly outperforming even hedge fund managers,” with gains that are “both economically large and statistically significant.”

They beat the market, my friends, by 10 percentage points a year.

Take that, Jim Cramer!

The authors suggest that members of Congress have access to “nonpublic information that could have a substantial impact on certain businesses, industries or the economy as a whole,” and that investing on that information “could yield significant personal trading profits.”

In the study, the authors recommend all kinds of new disclosure and monitoring requirements to root out misconduct and shut the door on the Congressional casino.

Wonks!

The real lesson here, obviously, is an unbeatable investment strategy. To your impecunious correspondent, the path is clear: I need to be elected to Congress!

Over the years, my own strategy has produced abnormal returns, but in the wrong direction. Like a reverse Midas, I have a way of turning gold into stuff that pigs like. It’s time for me to produce gains that are “both economically large and statistically significant.”

I called one of the authors of the report, Alan J. Ziobrowski, an associate professor of business at Georgia State University, to learn more. He explained that he and the other researchers used the phrase “abnormal returns” to describe profits “beyond the area that we would call normal good fortune,” money so large that “it’s not rational to assume that they are just plain dumb-lucky.”

Professor Ziobrowski also gave one possible explanation for why the trading profits appeared to diminish the longer that someone served in office. “At some point,” he said, “it could be that the risk isn’t worth the return, if you know what I mean.”

About now, you are probably thinking, “Schwartz, you idiot.” And, if you’ve read this column before, it’s not a new thought. But this time I really think I’m on to something. You run for office on other people’s money. Once you win, you get the bits of information — academics might call them the Ziobrowski Whispers — that will bend the markets to your will.

What could possibly go wrong?

Well, Professor Ziobrowski’s enthusiasm for my idea seemed somewhat muted, as if he actually did not appreciate its brilliance.

“The key is, you’ve got to get elected,” he explained patiently. “You may have to sell your soul to do that.”

I asked, “And the problem with that is?”

He laughed. Considering what he knows about the possible returns, I asked, had he ever thought of running himself? “No, I can’t honestly say I did,” he said. “I’m a lowly little college professor.”

From Georgia, I pointed out. College professors from Georgia haven’t done badly on the national stage. Newt Gingrich has had two lines of credit at Tiffany’s worth more than a million bucks!

Mr. Ziobrowski, astonishingly, demurred. “I’m not ready to trade my free time for money.”

Frustrated, I called a former member of Congress, Nick Lampson, a Texas Democrat who served from 1997 to 2009, with a break from 2005 to 2007 because of an electoral loss.

I told him that I was looking for a role model. “You may have the wrong person,” he said. Especially when he served in Congress, he said, “I’ve always lived hand to mouth and didn’t have disposable income to invest.” Even now, he said, “I don’t have any stocks in anything of consequence.”

While he heard things while serving that might have made him some money, he said, “I never felt comfortable doing things when I heard.” His time in Congress did not make his family rich, he said, but he’s not complaining. “We’re paying our bills, and I sleep well at night, and I’m reasonably happy,” he said.

What’s wrong with these people? That’s certainly not the way I’d play the game. I disclosed to him my desire to cash in by getting in.

He said something that caught me by surprise. Though you couldn’t tell it by looking at many of the members, it’s actually not that easy to be elected to Congress. “It’s ugly,” he said. “It’s hard.” Party labels set voters against you, he said, and people say awful things about you. Still, he said, “If you’re there, and you’re there for the right reasons, it’s for me the most rewarding thing I’ve ever done in my life.”

I don’t think we have the same working definition of “rewarding” or “the right reasons.”

This was starting to sound like a less attractive deal than I had thought. An opponent who wanted to say awful things about me probably wouldn’t even have to lie, or to dig very deep. People have said awful things about me for most of my life, and to my face. They are called editors.

But I digress.

If I can’t win, here’s another thought: How about a mutual fund tied to senators’ purchases? If their information is so good, let’s all sign on.

The possible flaw in that plan, of course, is that information is only valuable if it’s held by the few. Let everyone in on the secrets, and they aren’t secrets any more. The senators and House members wouldn’t make any more money in the market than the rest of us.

And the problem with that is?

Article source: http://feeds.nytimes.com/click.phdo?i=b6bb93a6ea4b657216a5674edb166c94

Filed Under: Business News Tagged With: hedge fund managers, percentage points, pigs

DealBook: Starting Up, Funds Turn to ‘Seeders’

July 5, 2011 by NewsMaker Leave a Comment

Far from Wall Street, few have ever heard of Robert T. Discolo. But in the world of hedge funds, Mr. Discolo is one popular guy.

He oversees a seeding fund at PineBridge Investments, which means he provides cash for hedge fund start-ups whose managers harbor dreams of becoming the next Steven A. Cohen or John A. Paulson.

While seeding funds have been around for the better part of two decades, they are staging a recovery as more prospective fund managers spill into the market but struggle to attract investors.

Executives at seeding funds say it has never been easier to find talented hedge fund managers eager for cash.

“This is probably the best environment I’ve seen since I started in the business back in 1988,” said Mark Jurish of Larch Lane Advisors, which is PineBridge’s seeding partner.

Chester Higgins Jr./The New York Times Robert T. Discolo, right, of PineBridge Investments, with Mark Jurish of Larch Lane Advisors. Together, the two firms are now creating a $1 billion seeding vehicle.

The hard part, however, is finding great investment strategies and backing funds that will not wilt and die.

Just a few years ago, analysts, traders and others on Wall Street who wanted to open up their own hedge fund shops practically had money raining from the skies. The joke inside Goldman Sachs was that if you couldn’t raise more than $1 billion to open up your hedge fund, don’t even bother.

What has changed is that many investors, including pension funds and university endowments, now are more inclined to put money into established hedge funds with proven track records rather than bet on start-up managers.

Also, the start-ups are turning to seeders with back-office resources as costs rise to comply with new hedge fund regulations that require compliance officers, audits and more disclosures.

As a result, a number of firms — including the Blackstone Group, Goldman Sachs, Reservoir Capital and upstart seeder firms like NewAlpha Asset Management — have been raising money from investors to place with new managers.

An investment in a hedge fund that becomes a sensation can be lucrative for the seeders, who typically take equity stakes in the hedge funds or a portion of the fees the hedge funds generate, typically 2 percent of total assets and 20 percent of any profits.

Industry titans David E. Shaw of D.E. Shaw and Daniel S. Och of Och-Ziff Capital Management, whose firms oversee a combined $50 billion, both started with money from seeding funds in the late 1980s and early 1990s.

Of course, for every Shaw or Och there are dozens or even hundreds of hedge fund managers who flamed out or simply never attracted enough cash from outside investors.

Despite lackluster returns in recent years, the hedge fund industry has rebounded sharply. Its assets have surpassed the 2008 peak and now stand at more than $2 trillion, according to Hedge Fund Research, based in Chicago.

Seeders are raising more cash too. The amount of capital expected to be invested with emerging managers in the first half of this year is expected to total around $2.5 billion, according to the results of a survey of about 40 global hedge fund seeders conducted by the Acceleration Capital Group, a New York-based firm. While that amount is double what a similar survey showed in 2009, it is well off the $7.5 billion that emerging managers expected in the industry’s heyday in late 2008, according to data from the firm.

Even with the revival, it can be tough to get the attention of a top seeding executive.

“You call them, you call them again and then you call them again,” said Steven R. Gerbel, the founder of one hedge fund firm, Chicago Capital Management. “Finally you get through and you’re told 12 bogus reasons why you’re not getting a seed. It is incredibly frustrating and horrifically painful.”

Mr. Gerbel says he has spent years searching for someone to provide capital to increase the size of his fund, which manages about $36 million and says in its marketing materials that it averages yearly returns of around 19 percent.

Recently, Mr. Gerbel said, one potential seeder told him his firm had too much infrastructure — investor support and regulatory compliance — while another said he didn’t have enough.

“I’ve come to the conclusion that my infrastructure is properly sized,” he grumbled.

While Mr. Gerbel would welcome the money, he is less than thrilled with the onerous terms of the seeding deal itself.

“The seed capital providers own it all: the stadium, the bats, the balls, the bases, your uniform, your cleats, the field and the concessions,” said Mr. Gerbel. “And if you want to play you just have to live with it.”

More managers are in the market in part because Wall Street shed certain businesses like proprietary trading in the wake of the financial crisis. Not all of them have a compelling investment strategy.

“In today’s world, you have a more attractive world of partnering with the talent and less attractive world of strategies,” said Daniel H. Stern, the chief executive of Reservoir, who has seeded a number of successful hedge funds, including Och-Ziff, across Wall Street over the years.

Mr. Discolo at PineBridge said that recently managers had been knocking on doors with funds looking to invest overseas, particularly in Asia. And then there are the truly unusual strategies, Mr. Discolo said, noting that he had seen funds that were planning to invest in leveraged life insurance settlements, receipts for televisions stored in warehouses and Pakistani equities.

The Larch Lane-PineBridge partnership is in the midst of raising a $1 billion seeding vehicle that will invest in about a dozen hedge funds. The seeder fund has already backed an equity fund managed by Stonerise Capital of San Francisco and a United States bank-loan fund managed by the Boston-based Feingold O’Keeffe Capital, according to a report on Hedge Fund Alert.

PineBridge is the renamed former asset-management arm of the American International Group, which sold it to the Asia-based Pacific Century Group in 2010.

PineBridge’s press relations firm declined to comment on the fund, citing Securities and Exchange Commission restrictions on hedge fund marketing activities.

In general terms, however, Mr. Discolo said a selective seed manager might invest in about one out of every 100 hedge fund managers.

“Everybody thinks they’re going to be the next Marc Lasry,” Mr. Discolo said, referring to the manager of Avenue Capital, which oversees $13.7 billion. “He’s a great manager, but there are not that many Marc Lasrys out there.”

Article source: http://feeds.nytimes.com/click.phdo?i=f622bff7c4054e9a096dd0adf42a597a

Filed Under: Business News Tagged With: hedge fund managers, paulson, steven a cohen

A Hedge Fund Manager’s Latest Bet: The Mets

May 27, 2011 by NewsMaker Leave a Comment

But Mr. Einhorn — one of a handful of hedge fund managers followed by investors looking for the next smart play — insists that he spends far more time trolling through the bargain bin, looking for companies with potential that others have dismissed, then betting on their long-term revival.

On Thursday, in announcing that he has entered into exclusive negotiations to spend $200 million for a noncontrolling stake in the Mets, Mr. Einhorn, 42, may be making one of his most intriguing long-term bets yet.

The Mets, as their principal owner said in comments published this week, are lousy, snakebitten and bleeding cash, having lost $50 million last year alone. Attendance has plummeted at Citi Field, their expensive new ballpark in Queens. Perhaps most daunting, the trustee for the victims of Bernard L. Madoff’s Ponzi scheme has sued the team’s owners for $1 billion.

Mr. Einhorn did his best Thursday to sound like a friendly investor in a team very much in need of friends. He spoke fondly of dressing on Halloween as Dave Kingman, the face of the Mets during lean years three decades ago. He coaches his daughter’s Little League team. He said that he had, while growing up in Milwaukee, hit home runs into the backyard of the baseball commissioner, Bud Selig.

Mr. Einhorn emphasized that his investment in the Mets was not related to any of the $8 billion or so he manages at Greenlight Capital, his hedge fund. He sent an e-mail to investors to clarify the distinction and acknowledged that he understood that rehabilitating a troubled franchise would not be swift or easy.

“Baseball is a tough sport, and everyone wants to win more games,” said Mr. Einhorn, who would become one of a handful of financial moguls to own a professional sports team. “Over time, there is going to be losing seasons and tough seasons and winning seasons and hopefully championship seasons. I hope to experience all of those.”

Forbes magazine values the Mets at $747 million, 13 percent less than last year. The true value of the team, though, will not be known until it is clear what percentage of the club Einhorn will get for his $200 million.

Despite the team’s problems, Mr. Einhorn’s proposed stake in the Mets — which must be completed with the team and approved by Major League Baseball — fits a pattern. He enjoys making money, and seems to enjoy almost as much crowing about how right his often blunt, often controversial investment analysis typically proves to be.

Indeed, he wrote a book detailing his prescience and some of the ills of the financial industry. It was titled, “Fooling Some of the People All of the Time.”

Mr. Einhorn does not seem to have the makeup of a hard-charging hedge fund manager. Mild-mannered, he speaks deliberately and softly. He was born in Demarest, N.J., and his family moved to Milwaukee when he was 7. He graduated from Cornell with a degree in government, not economics or business.

While many fund managers work well into the night, Mr. Einhorn is known to leave the office early enough to get home to Westchester for his daughter’s Little League games. He is active in several charities and, with his wife, Cheryl, set up a trust whose mission is to help people get along better.

But Mr. Einhorn also grew up in a financially minded home. His father is a banker who helps facilitate mergers and acquisitions. Mr. Einhorn helped found his hedge fund in 1996, when he was in his late 20s — a young age by industry standards — with less than a million dollars, much of which came from his parents.

He is a believer in so-called value investing, a strategy made famous by the likes of Warren E. Buffett (he once paid $250,000 to have lunch with the legendary investor), which holds that the best investments are made in good companies that are cheap. He will spend months reviewing a company’s financial information, searching for hidden value. He can then bet big, sometimes on the order of hundreds of millions.

Mr. Einhorn is fond of quoting Ken Griffey Jr. when talking about his investment style: “I don’t consider myself a home run hitter. But when I’m seeing the ball and hitting it hard, it will go out of the park.”

Like Mr. Buffett, Mr. Einhorn has a shrewd, quick mind, according to several hedge fund managers, skills that undoubtedly came in handy in 2006, when he entered the World Series of Poker as a relative novice in conventional gambling. He finished 18th out of 8,773 contestants.

His brand of poker is something of a metaphor for his style of business. Playing Texas Hold ’em, Mr. Einhorn told New York magazine in 2008, is about waiting for a chance to pounce, then pressing the advantage. “We make bigger bets every day,” he said of his day job. “There’s more at risk in what happens in Microsoft than I could ever bet on a poker table.”

His big bets and the economics of hedge funds help explain why he can afford to spend $200 million on a money-losing team. Hedge funds invest money for the wealthy as well as pension funds and other institutions.

Mr. Einhorn charges investors 1.5 percent to manage their money and 20 percent of any profits generated, investors in the fund say. Since its inception, his fund has returned 19 percent to investors on average per year.

While some hedge funds engage in campaigns to replace executives of the companies they own, Mr. Einhorn is often quiet when dissatisfied. But when he does go public, his words can move the markets. On Wednesday, Mr. Einhorn derided Steve Ballmer, the chief executive of Microsoft, as “stuck in the past” and suggested its board look to replace him. Mr. Einhorn owned about nine million shares of the company as of the end of March, according to a regulatory filing, worth about $200 million.

Since his comments, the shares are trading up about 2 percent.

His investment in the Mets may be more problematic. The team, run as a family business, has not had to acknowledge outsiders in the boardroom. Some smart people on Wall Street looked at the Mets’ books and walked away because the team refused to sell part of its share in SNY, its profitable cable network. Mr. Einhorn has decided to pay only for shares in the team.

The decision has some investors wondering whether he sees an angle no one else discovered.

“He’s a value guy,” said Anthony Scaramucci, a managing partner at the investment firm SkyBridge Capital, who was part of another group that looked to buy part of the Mets. “So you’d have to look at this as a growth opportunity and hold your nose and eyes for 10 years.”

Peter Lattman contributed reporting.

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