Andrew is a hedge-fund manager, one of a new breed of super-rich. Until recently the City’s best-kept secret, over the past couple of years, this small, brilliant band of men (and, occasionally, women) has quietly been keeping the battered luxury market afloat and redefining the parameters of how to become seriously rich and reap the lifestyle benefits. “Don’t let it be thought that I don’t work my butt off, because I do,” Andrew says. “But the difference between me and my banker friends is that, if the market’s looking good, I can do my work in the Caribbean or at a chalet in Verbier, from the hot tub or in jeans and a T-shirt. Plus, I can make a hell of a lot more money.”
Their money has transformed London and New York: they have snapped up prime properties (they are cash buyers), which they have decorated with Picassos and Van Goghs (Steven A Cohen, one of the 10 leading art collectors in the world, is a hedge-funder), and they fly to their private islands in their Learjets. “They are the guys who buy £100,000 antique guns for their collection at Sotheby’s, then forget to go and pick them up,” says one London-based hedge-fund manager. “They love boys’ toys.”
Yet, while the loadsamoney bankers of the 1980s flaunted their wealth, hedge-funders are distinguished by their class and discretion. “We look after a lot of hedge-fund managers, of whom 80% have incredibly good taste,” says Harry Becher, fixer for Quintessentially, the lifestyle-concierge company. “They’re the opposite of footballers or the traders who drive around in yellow Lamborghinis with big hair, shaking champagne. These guys are refined and unflamboyant. They’ve got brains, and they know how to spend their money. Over Christmas, they were the guys buying their wives a beautiful Asprey cardigan or a personalised backgammon board from Dunhill. They won’t holiday in St Tropez; it’s far more likely to be a private yacht cruise around Sicily or Croatia. It’s all about being low-key.”
There are only about 7,000 hedge funds in existence, run by people few of us have heard of, yet they are believed to control $1 trillion worth of cash. The king of investors, Warren Buffett, describes them as “the next holy grail”. It’s a high-risk, high-return way of doing business. Hedge-funders typically collect 20% of the profits they make for investors. And they spend that 20% on ... living life in a way most of us can only dream of. Notoriously publicity-shy, they are the mavericks, the rock stars, the crème de la crème of the financial world. “These are people who went to top universities, have good degrees and were outstanding within the banking sector,” says Christopher Brandon, 31, a London-based hedge-fund manager. “They are some of the most clued-up, intelligent people you could ever hope to meet.”
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Freed from the shackles of a large corporation, these eccentric and egotistical characters are determined to avoid the burnout that plagues most of their former colleagues. Rather than the City, nearly all have chosen to base their offices in Curzon Street, Mayfair (nicknamed Hedge Fund Alley), to avoid long commutes from their homes in Notting Hill, Kensington and Chelsea, and have kitted them out with chefs and gyms.
“The ethos is a bit like Virgin Atlantic in the early days — dynamic but employee-friendly. We can’t ever not perform, but we can do it according to our personal tastes and preferences,” says one hedge-fund manager. He ensures that he fits in a session with his yoga instructor every day, “even if it means flying her to Geneva”.
Vega, one of the world’s largest hedge funds, is based in a luxurious villa, with its own chef and a huge swimming pool. “Whether its traders ever actually have time for a swim or not is another question,” says a rival. “But the point is, it’s there as a gesture. It says, ‘This is our company, and this is what we feel is important.’” Some make a point of going to work in jeans and T-shirts. “The big names won’t even wear a suit to meetings with important investors,” says one insider. “They’re far too arrogant for that.”
Louis Bacon, 48, the notoriously handsome — and private — American founder of Moore Capital, is believed to be worth £450m. His properties include homes in Chelsea, Colorado and the Bahamas, and he has had a squash court installed in his Mayfair offices. “Some of his staff are former professional squash players, and whenever he wants a game, he just clicks his fingers,” says a colleague. “That’s how he blows off steam.”
Yet, unlike the “greed is good” tycoons of the 1980s, Bacon — like many hedge-funders — is also a keen philanthropist. He recently signed over large swathes of Robins Island, his private island off the New York coast, where Prince Charles has been a guest at one of his stag hunts, to environmental groups, ensuring that real estate estimated to be worth $85m will remain a wildlife haven for ever.
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“Conspicuous giving, rather than consumption, is very much the philosophy,” confirms Iain Martin, editor of Hedge Fund Manager magazine. Several funds donate at least half their profits to charity. They are influenced by perhaps the most famous hedge-funder of all, George Soros, who is worth about $7 billion; his foundation gives more than $400m a year to good causes.
In 2003, the children’s charity Ark collected £4m from a dinner and charity auction for the hedge-fund industry. At the time, it was said to be the largest amount ever raised at a single event of its kind in the UK — it included selling off Hugh Grant and Elle Macpherson as golf partners.
“People who nobody would have heard of outside the industry were bidding incredible amounts for prizes, like a week for 10 in someone’s chalet, with a Gulfstream and a Michelin-starred chef thrown in,” says one manager who attended the evening. “It was one of the rare times you got to see how much money these people had, and they were loving the chance to exercise their competitive natures, by saying, ‘Not only am I richer than you, I’m also more generous.’”
Yet the crazy days may soon be over. Newcomers are flooding the field, making great deals harder to find. “The easy money’s been made and, as hedge funds become more mainstream, the bureaucrats are clamping down on us,” says Andrew regretfully. Then he grabs a chunk of fresh pineapple and cheers up. “But if you’ve got the talent, there are still plenty of opportunities out there. If you want to find the serious money, this is still the place to look.”
Then he picks up the phone to tell the chef exactly what time lunch should be served.