Last month on a rainy Saturday in suburban Connecticut, a ragtag band of more than 100 umbrella-wielding protesters descended on the gated community of Belle Haven, chanting, “Hey, you billionaires, pay your fair share!” as they passed white picket fences and private drives. Reaching their destination, the entrance to a waterfront mansion owned by hedge fund billionaire Paul Tudor Jones II, founder of Tudor Investment Corp., the demonstrators crowded around one of their leaders, Michael Kink, executive director of the Strong Economy for All Coalition.
“We’re here in Greenwich, Connecticut!” Kink belted into a megaphone, his horn-rimmed glasses splashed with rain. “We’ll be in New York City on Park Avenue! At One57! At Central Park West!”
“We’re going to make them pay their fair share,” he continued to riotous cheers. “We’re going to make the politicians listen to the people! Regular people — not the billionaires! We the people!”
Kink was followed by four community activists and organizers, including Jonathan Westin, director of New York Communities for Change, and Elzora Cleveland, a New York City school board member. “Your billions don’t get to make change; we do,” proclaimed Cleveland. “I am a voter. I have rights to a public education for my children, to proper housing, to a wage that is fairer so I could survive without living on welfare.”
Their picket signs soggy from the downpour, the demonstrators repeated the speakers’ lines in unison. After 15 minutes of speeches, they started to disperse, heading back to the buses that had delivered them from New York. “We will be back,” they promised.
The protesters who descended on Jones’s mansion are members of community and labor groups that have organized under the name Hedge Clippers. In the weeks that followed, smaller groups of Hedge Clippers — carrying cardboard hedge clippers — popped up at hedge fund managers’ luncheons, offices and apartments and made appearances in Albany at the offices of Republican state senators. Using demonstrations, research reports, social media and other tools, they are planning a series of protests directed at hedge fund managers over the coming weeks and months. The goal: to raise awareness of the disproportionate influence this wealthy group of individuals is having over New York politics.
Outrage over rising income inequality and the increasing politicization of hedge funds is the driving force behind the Hedge Clippers. The group is tapping into the feeling of unrest toward Wall Street that has been building since the 2008-’09 financial collapse, exacerbated by changes in campaign finance laws and concerns over an economic recovery that seems to have left behind the working class. Broadly speaking, the objections of the Hedge Clippers can be broken down into four key issues: the influence of big money in politics (particularly in New York State), tax policy, living wage jobs and charter schools undermining public school education. In this, the first of a series of articles, Institutional Investor will look at the causes behind the movement, the focus of the group’s protests and what lies ahead.
Like the Occupy Wall Street movement that preceded it, the Hedge Clippers do not share one unified voice. But unlike Occupy, they are much narrower in the choice of their target — the hedge fund superrich — as a way of personalizing the campaign. “With Hedge Clippers, there’s a particular focus on the hedge fund billionaires and the hedge fund elite as the poster children for the inequality economy,” says Kink. “These are the people who are doing stupendously well and stupendously better than anyone else.” Kink argues that the campaign contributions of Jones and others have purchased lower tax rates and tax loopholes. “They’ve been working the system with their gains to continue to benefit, while others don’t,” he adds. Jones declined to comment through a spokesman, Stu Loeser, who represents him on personal affairs.
The Strong Economy for All Coalition began in 2011, primarily driven by Local 1199 of the Service Employees International Union (United Healthcare Workers East) president George Gresham and United Federation of Teachers president Michael Mulgrew, in response to state and citywide budget cuts threatening education spending and job creation programs. “New York’s budget didn’t require all of those cuts to schools and services that the mayor and governor were trying to push down folks’ throats,” says Kink, who was recruited from the New York State senate, where he was chief policy adviser and senior counsel to the Democratic majority conference, to head the Strong Economy for All Coalition. “There was a different model of fiscal policy that would’ve gotten us enough money to respond without the severe cuts, and that is one of the things that we’ve been doing together for the last several years: talking about fair share taxes and revenues and bringing options to the capital every year.” In its first year the new organization received $300,000 from the New York State United Teachers, the UFT’s state-level affiliate, and $95,000 from the Communication Workers of America. NYSUT is the largest source of union funding on record, shelling out some $250,000 a year since the coalition launched, according to U.S. Department of Labor archives.
The Hedge Clippers project launched this February with the release of its first online report, which focused on the connections between Leonard Litwin, owner of New York–based real estate developer Glenwood Management, and Sheldon Silver, New York’s Democratic assembly speaker who resigned shortly after being arrested on federal corruption charges the previous month. The Hedge Clippers have put out eight reports since then, including an analysis of campaign contributions by hedge fund managers as well as individual reports on Jones, Third Point’s Daniel Loeb and Elliott Management Corp.’s Paul Singer. (Both Loeb and Singer declined to comment for this story.)
Since the start of Hedge Clippers, the group has increasingly set its sights on the hedge fund industry. Owing to their wealth and a loosening of campaign finance rules, hedge fund managers have been a growing source of political donations at a federal and state level. Last fall several hedge fund titans, including Tudor Investment Corp. founder Jones, funneled nearly $4 million into New Yorkers for a Balanced Albany, a pro–charter school political action committee that ran advertising campaigns and made political contributions to help Republicans gain control of the state senate. Loeb and Tiger Management Corp.’s Julian Robertson Jr. led the charge, accounting for $1 million each. The other hedge fund managers involved were Maverick Capital’s Lee Ainslie III, Moore Capital Management’s Louis Bacon, Gotham Asset Management’s Joel Greenblatt, Baupost Group’s Seth Klarman, Glenview Capital Management’s Larry Robbins and Elliott’s Singer. To date, Jones, Loeb and Singer have all been the targets of protests, but presumably the other supporters of New Yorkers for a Balanced Albany will see cardboard hedge clippers on their doorsteps in the near future.
Hedge fund managers have been increasingly active in New York state politics, according to Susan Lerner, the executive director of Common Cause New York, a branch of the Washington-based lobbying group that advocates for campaign finance reform. Although there is no uniform ideology among hedge funds as a donor class, Lerner says they do sometimes cluster around certain issues like charter schools. “As opposed to the more traditional financial industry, where you see predictable giving around certain issues that influence regulation of the financial industry, the hedge fund people seem to be giving based on their own personal causes,” she explains. “And that is unusual.”
Hedge fund managers’ enthusiasm for charter schools, however, has not been popular with teachers’ unions. In 2013 the American Federation of Teachers released a watch list of investment management companies with high-ranking personnel affiliated to any of four organizations that, the union said, advocate for the replacement of defined benefit plans with defined contribution or cash balance plans: StudentsFirst, Show-Me Institute, Manhattan Institute for Policy Research and Illinois Is Broke. Most were also supporters of charter schools. In an unprecedented move, the AFT advocated that pension plans divest assets from any manager with ties to these groups. Among the managers of blacklisted hedge funds in the 2015 watch list are Singer, chairman of the Manhattan Institute, and Loeb and Jones, both of whom serve on the board of StudentsFirstNY.
At the start of this month, the New York State legislature passed a $150 billion budget for 2015 and infuriated the Hedge Clippers by expanding sales tax cuts for buyers of luxury yachts and private aircraft, including jets and helicopters. Whereas Tudor’s Jones might be able to save some money on his next helicopter purchase, the new budget only adds fuel to the fire of the disgruntled protesters who paid his neighborhood a visit. At the rally in Belle Haven, Darius Gordon, an organizer for Citizen Action of New York, had a message for Jones that day: “Pay your taxes. We’re people too. You put on your pants just like we do. It’s not fair that we have to fight for our crumbs while you get tax breaks for places that you don’t even live in. You don’t live in New York State. It’s not fair that you can influence New York State politics. It’s not fair that you can influence New York City public schools — our education. Our children are just as important as yours, and you need to step up.”
The Hedge Clippers show no sign of slowing down. The weekend following the Greenwich protest, the group rallied in New York’s Columbus Circle to march on 15 Central Park West — the ultraluxury condominium where Loeb famously outbid Carl Icahn for a $45 million penthouse — to protest the Third Point founder’s support for charter schools and activist investor style. Outside the 35-floor limestone tower, Katherine Brezler, a Yonkers public school teaching assistant, aired her grievances over New York’s teacher evaluation policy, which rates teachers based on student test scores. “The tests don’t work,” Brezler yelled toward the sky. “I’m a teacher, and I can tell you what our kids need. Our kids need hedge fund billionaires to pay their fair share.”
Outside Loeb’s apartment, Citizen Action’s Gordon explained the criteria for making the Hedge Clippers’ hit list. “Dan Loeb is our target because he’s another one of the hedge fund billionaires, like Paul Tudor Jones,” he said. “We have to single them all out because they’re hiding behind a building. We have to put a name to the face, and we’re calling them out.” Although Gordon noted that the group hadn’t decided on its next target, he suggested it has a long list ahead: “All hedge funds should be on alert.”
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Follow Jess Delaney on Twitter at @jdelaney_NYC.
