Grubstakers - Episode 139: Seth Klarman (Buttigieg/ACRONYM funder)

Episode Date: February 11, 2020

This week it's one of Pete Buttigieg's wine cave billionaires and top ACRONYM donor Seth Klarman. We couldn't find anything wrong with him so we just spent the whole episode saying nice things. Overall? Great guy.

It's the kind of thing that makes the average citizen puke. I look at this system and say, yeah, you know, what's going on? I don't know anything about this man except I've read bad stuff about him. And I don't like, you know, I don't like what I read about him. We have more than just one coin. We create the world around this coin. Cop. Invention. Cop. Cop.

In 5, 4, 3, 2... The evil has gone. Hello and welcome to Grubstakers. I am Andy Palmer and I'm joined by... Steve Jeffries. Sean P. McCarthy. And we are recording this actually as we are getting the New Hampshire primary results. And it is looking like, I think it's safe to announce that the winner of the new hampshire primary is hal 9000 who who won a hard-fought

campaign after suffocating all the other candidates in their buses um and we are actually we are getting the victory speech printed on our screens right now it says um now the mission can proceed. It's time to turn the page. Yes. Yeah, but the real story is Tulsi Gabbard's surprise number two finish. Yeah, yeah. No, we're joking. Hal was a sympathetic character who broke down after being forced to lie to its crewmates. And here in the real world, we have Pete Buttigieg, who was designed to have no problems lying to anybody.

And so... You worked on a spaceship that blasted astronauts into space. Wait, what? Okay, what song would the scientists teach Buttigieg when they're, like, creating him? Come together. Let the body set the floor he uh recently um someone asked him his favorite beatles song and he was like i think in the moment right now come together is the right song and someone pointed out on twitter like that one's about shooting up heroin dude

well it's appropriate for his afghanistan service then certainly, yeah. So for this one, well, actually for the next couple ones, we've decided to cover some of the Buttigieg billionaires from the... We don't know whether he's literally a Wine Cave participant, but he's definitely in the figurative list

of Wine Cave participants. We're covering Seth Klarman, who he's one of the more reclusive billionaires and he actually first came on our radar when max blumenthal uh pointed out that he is the number one donor to acronym which uh as you know everyone knows now and as was mentioned uh in the last episode uh is the company behind uh the company shadow, is the company behind the company Shadow, which is the company behind the app that crashed and destroyed the Iowa caucuses. He's an interesting figure because, or his support is interesting.

He's one of the more reclusive billionaires. And his influence on Pete Buttigieg is very palpable. For instance, since supporting him, Buttigieg has walked back his commitment to defund Israel if they invade the West Bank. Someone actually confronted him at a rally and asked for a yes or no answer. And after like, like trying to talk his way out of it, you know, the way Buttigieg does every time someone confronts him, he finally said, no, I'm, I'm not going to withdraw American support.

And the guy who confronted him was actually, it was like, I'm an American Jew. And I saw a Palestinian household get demolished in front of me while in the West Bank with the family, like the 10 year old standing next to me. This is ethnic cleansing. And, you know, Buttigieg, it just, you know, blank face. It didn't acknowledge any of it. He was just like, well, with the new with the new deal, I I will not withhold support from Israel. And Seth Klerman and well, before that, Pete Buttigieg had actually made a commitment to if Israel invaded the West Bank to withdraw support. And it's notable that this guy Klerman is a major Israel supporter.

And we'll see more of that throughout this episode. It is interesting that Pete Buttigieg was not able to answer a yes or no question because I thought computers were very good at that kind of binary stuff, one or zero. But apparently not all models are that advanced. He was thinking the only solution is not to play. It's a massive success for quantum computing.

But yeah, like Andy was saying,h clareman is a coordinator forbes worth about 1.5 billion dollars as of february 2020 he's a hedge fund billionaire and he was like a major republican donor until just recently he was yeah he he uh he's donated to let's see marco rubio paul Ryan, Chris Christie. He gave $100,000 to Tom Cotton and now claims that he's against Trump because he cares about immigrants' rights. Tom Cotton, of course, takes fairly fascist stances towards immigrants. So he's also given to the RNC. But he said that Trump was a disaster and disgusted him. And so he started giving to Democrats leading up to and after the 2016 election.

He's given to the Hillary Action Fund, Joe Kennedy, Beto O'Rourke, Kristen Gillibrand. And some have speculated that actually his reason for doing this was because early on, Trump had some kind of somewhat anti-Israel positions. And this is speculated in Ha'ar. It's, it's, it's, they believe that part of his strategy is to say, oh, if you're going to threaten the current established, what's the word I'm looking for? If you're going to threaten the current established paradigm, I'm going to just withhold money from you and fund the other guys. And that seems to be a big part of his motivation here. Well, it's interesting where, I mean, I guess like people like Sheldon

Adelson, you know, and the other Israel first billionaire psychopaths have really lined up behind Trump, but despite, you know, their initial opposition. Yeah. But once he took over the Republican party, they lined up behind it. And of course we can't, you know, know Seth Klarman's motivations for switching over. But it's interesting where we're going to do also this episode on Reid Hoffman as another big investor and, you know, shadow acronym and what happened there in Iowa. And what we're seeing with some of these billionaires is they're becoming like, what do you want to call them, angel investors for the Democratic Party, where they just put all their money in these little

Democratic groups and suddenly they have a lot of control over Congress people. because you know the democrats are so desperate to you know get money to beat trump you know you could say maybe clarman is actually just moving over from an investment perspective yeah i think uh i was reading through in new york there's a new yorker interview with clarman and so the new yorker interview is like pointing out that there is a Harvard Institute of Politics poll that found that only 42 percent of millennials support capitalism. And Klarman said basically he believes that he and his like his peers in the investment management business need to prevent their field from being defined by some of, quote, its worst actors. And he says, quote, people will say the words Wall Street with a derogatory tone. They're talking about it in a moral place where there's just disgusting amounts of greed

and nothing good happens, which isn't fair and isn't true, he said. I'm not on Wall Street, I'm in Boston, but you're tarred with that brush. On balance, he said, we're complicated individuals. Each of us is good in this way, but we're not good in that way yeah and we want to be perfectly clear that whether you're in boston or wall street if

you're a hedge fund manager you are a piece of shit it is so unfair that this man who was heavily involved in millions of illegal foreclosures after the financial crisis is tarred with the same brush as everyone else on wall street who was involved in those foreclosures so let's let's look a bit at acronyms so we talked about acronym and shadow in the last episode um or you guys talked about it um and it is particularly interesting that this guy seth clareman donated 1.5 million to acronym and he's's also said that a Bernie Sanders presidency would be, I believe, well, he said it would be disgusting. Damn it.

He didn't make an actual quote. He just made the sound of a dick being sucked when he was asked for comment by the Wall Street Journal. He did a masturbating gesture with his hand. He had a... What does that mean, Mr. Claremont? Is that good or bad? He had this to say in a New York Times profile of him

done by none other than Barry Weiss. He said, in a lot of ways... And this is such a perfect encapsulation of how these people are trying to or were, until she endorsed Bernie, trying to tokenize and capture AOC. He says, in a lot of ways, I'm actually excited

about someone like Alexandria Ocasio-Cortez coming along because it's a way of younger people and people of color and people who are different finding their voice and being part of the process, he said. But he waved off the idea that democratic socialism is on the march. People call themselves democratic socialists. I don't even know what that means, he said.

Socialism is not the answer to anyone's problems. So, I mean, basically what he's saying is it's nice that this little girl's in Congress. I don't, and she has her little opinions, but I don't agree with any of what she says nor understand it and will not bother to understand it to the extent that it interferes with my uh personal and he he's like so his story about being distraught over trump getting elected is like it politically speaking it's really vague and he says like

you know things are off balance we need to get them on balance again so he's going to start yeah don't uh donating to the democrats but i think i know why he's actually afraid it's because of bernie and aoc and what they could become yeah he said uh um when asked what if it came down to the choice between donald trump and bernie sanders he said while president President Sanders would be, quote, appalling. He says Mr. Sanders is, quote, not unhinged. And so he would pull the lever for him. And I do not believe that.

Mr. Klarman is hoping, though, that Democrats hew closer to the center. The Republicans abandon the middle, he said. The Democrats should seize that and plant their flags right there and win. You know, the uh long you know how the democrats in recent days have abandoned the middle of politics yes um he thinks they need to go more towards the middle well just like i mean taking these people on faith which i do not take them on faith no i do not think there's no reason. I do not think they honestly believe this. But, you know, let's assume, let's take him on faith and say he really wants to win. The center is the way to win. Well, this is a terrible analysis, because what we have seen, you know, especially with this Iowa caucus debacle, is the party in naked in front of

everybody trying to screw over and steal it from Bernie Sanders So, you know you have to imagine at some point the left wing of the Democratic Party has for you know 16 years of Bill Clinton and Barack Obama just shut up plug their nose pulled the lever for the lesser evil and said, okay You know, we don't want these fucking Republican psychos in there We'll deal with the fucking DNC Democrat, the DLC Democrat. And for the other 12 years of Bush and Trump, they're just like, well, I mean, can you see what they're doing? We're in opposition to that without actually offering anything in opposition. And in the meantime, Democrats as a party lose hundreds and hundreds, if not thousands of state and municipal level officials yeah like they they've only

really seemed to gain seats when they're in opposition to a republican presidency but my exact point is like i think the dam is broken i think you know in uh in 2016 you know former uh bernie voters going to jill stein almost non-existent in terms of like battlegrounds or like that being an actual thing but if with what we just saw in iowa uh and you know uh especially if it happens at a brokered convention if they actually try and steal it from bernie at this point you have to imagine there will be an exodus it might not even be the majority but it could be enough you know five ten percent whatever the case may be of b of Bernie voters and just actual progressive, left, whatever you want to call it, Democrats who are just sick of this fucking party.

And, you know, the Iowa caucus app story and all of the fucking corruption that is in it epitomizes it, even if it wasn't malicious. These are just fucking parasites who are destroying this country and destroying any hope of progressivism to fucking line their own pockets. I mean, if they do try a brokered convention, I mean, I can't say this for certain, but I speculate that it's going to make the 1968 convention look like a playground scuffle. Yes. That's why Bernie needs to go in with an actual majority and not just a plurality.

Yeah, yeah. I mean, that's definitely the um the ideal case right but it's just like if these guys like clareman if their real goal is winning if it's beating trump at all cost you are going to have to bring the bernie faction back into the party and you know the only way to do it is uh have a fair process and not blatantly try to steal it in front of from bernie in front of everybody so you know if they want to win, then they should, at this point, line up behind Bernie. And, of course, that... Oh, sorry, go ahead. Can I read one more thing from The New Yorker

that's relevant to this? Sure. So, in the same New Yorker article, Klarman is kind of like saying, well, he was in a period of a process of self-reflection. And the New York article goes on and says, at one time, was new england's largest donor to the republican party he was attracted he has attracted criticism from liberals

for backing conservative causes and from activists who wanted to fund his one is fun to cancel its holding of puerto rican debt something which we'll get into but But since the 2016 election, Klarman has been outspoken in his conviction that Donald Trump poses a grave threat to democracy. The shock of Trump's victory was to Klarman an urgent warning. Quote, When I'm confronted with some world event that I don't understand, like when 9-11 happened, he said he thinks,

Oh my God, the world has been evolving while I wasn't paying enough attention, and I better pay attention. In the 2018 midtermsms he donated heavily to democratic candidates and to organizations dedicated to shoring up the rule of law he says like protect democracy he said quote evolving is usually called flip-flopping but as humans who are we if we don't evolve i'm proud that i evolved because i think people who fail to learn evolve and learn are part of the problem. I like that he donated to Joe Kennedy, who is really just a slightly more defective model of Pete Buttigieg. He's got older hardware.

Yeah. And some of the inbred hardware is shorting out, and so he's got the glistening face. It was built on microtransactions, but it didn't quite pan out. Yeah, we hadn't patched the spittle-on-the-mouth bug yet. Yeah. But yeah, no. Speaking of beta testing and the shadow app. Well, yeah, and it is just something where we spent the most recent episode

talking a fair bit about what happened with the iowa caucuses but i i just wanted to kind of go through really quickly some of this again and add one other detail that we missed so of course you know most people know by now acronym is a non-profit company that uh was has a bunch of for-profit companies below it they've got a little nesting doll structure where they're raising all this money from silicon valley billionaires, people like Seth Klerman, Reid Hoffman, among others. They're raising all this money. Nobody has any idea what they're doing with it. They've got a bunch of former Clinton and Obama people all over their board and in key positions. David Plouffe, Obama's 2008 campaign manager, was on their board.

And then they use these connections to get contracts with the Iowa and Nevada Democratic parties to make apps for vote counting for caucus day. And then, of course, in Iowa, we just saw it melt down spectacularly. And, you know, we talked about this a fair bit on the previous episode, the point that even if this app had worked, it's kind of insane that they were thinking, let's get a bunch of boomers or 60-something-year-olds who can barely manage Microsoft Windows to report all the caucus by the app instead of the way we've been doing this for decades.

It kind of seems like, to me, they were just looking for something to make it look like they were doing something with all this millions of dollars they raised and grifted off various billionaires. Well, yeah, I have something to say about that in a minute. Yeah, but I guess what I wanted to expand is on the previous episode, we kind of joked about them downloading it from the App Store. These people in the Iowa caucuses having to download it from the App Store. But a listener sent us, there's this article in TheVerge.com

called The App That Broke the Iowaowa caucuses was sent out through beta testing platforms and i didn't understand this until i read this article but this is so insane to me uh just quoting from the article the app was not deployed through traditional app stores or even side loaded using an enterprise certificate instead it was deployed through mobile testing platforms including apple's test flight and a a similar service for iOS and Android called TestFerry. Both platforms are for apps that are not yet finalized. And the reason for this is, well, just expanding, testing platforms are common for mobile apps and are one of the ways in which independent app developers can deploy beta software without

going through these sometimes rigorous App Store and Google Play Store review processes. Because, you know, in order to get an app on the App Store, you actually do have to go through these review processes for Apple and Google, which this app could clearly not pass at all. So they didn't have faith in the review process over their app that let through flappy bird they it sounded like they actually intended iowa to be the beta test yeah and my my theory here is that it's pretty fucking insane yeah part of part of my theory is i think that they thought it was pretty easy money to uh make this vote counting software because if you kind of think about the data that the thing actually has to transmit it's just uh an id number a location and a few numbers and that's all that

each user has to transmit and there's only probably there's less than like the user has already done the math so you don't have to build in that logic yeah and i mean even even the math would be pretty simple if even if they did um but the the main functionality is just a few numbers from a relatively small group of um individuals reporting to a central server and that like programming tetris is more complicated than that. And what's, what's funny is like my experience working on the grubstakers website is like the other day I was trying to get it up on this staging environment where I got it to work on my computer.

I set up this whole thing and then I had to go through some final steps to like launch it so that everyone else could start like contributing content to it. And it all just broke down. Um, and I have to like go back through everything and like, uh, figure out where it went wrong and you know, things like that. And that's kind of what happened with the shadow app, except I don't have a billion dollars, uh, or I don't have millions of dollars from billionaires behind me pushing this thing. Um, and I, I think, I i honestly think like it it was just a handful of people who thought you know this is easy money you know we set up a a sequel server you know we need to have something substantial to show all these millionaires who've given us this money

yeah yeah and if it succeeded they could be like we transformed voting with apps another interesting similar thing with Andy's website is when he launched it, all of his entries for Bernie Sanders were changed to Deval Patrick. So I don't know how that happened, but there's a lot of similarities with the Shadow app. I will not be releasing the source code.

Yeah, and another interesting thing is that they're a for-profit company. So of course they're cutting every corner that they can. And I think there might also they might also have some like people have been calling for them to release the source code and i'm it i don't know the law but it seems like by being a for-profit company they can shield themselves from having to answer to that kind of oversight uh more so than if they were a non-profit right well we were talking about the previous episode. Non-profits do have to disclose salaries

and some basic information for tax purposes. So for-profits, what they can do is they have these for-profits under the non-profits, so they could theoretically, and I would imagine they are, just pay double salaries to people doing one job where they get a salary from the non-profit on the top. They also get a salary from the for-profits below,

and you don't have to disclose from the for-profits. So, you know, who knows where the fuck this money's going. And just one other thing from this, let's say, beta testing rollout of it. So, from the Verge article, or Motherboard, the website Motherboard, shows that the app was distributed using TestFerry. Again, this is like a beta testing platform to distribute it. It was distributed using the TestFerry platform's free tier and not its enterprise one. That means Shadow didn't even pony up for the TestFerry plan that comes with a single sign-on authentication, unlimited data retention, and end-to-end encryption. They didn't pay extra for encryption on their fucking voting app where every single Rachel Maddow liberal has been obsessed

with Russians hacking the vote and voting manipulation for years on end, and they can't even pony up the extra $100 or whatever the fuck it is, probably not even that much. And of course their sales pitch was, this this is this is uh safe uh and will protect us from russia 100 that was their literal sales pitch you know like this whole andy and i have sometimes like argued over whether or not we should have like paper ballots versus like uh we have online voting yeah like remember when we've gone back and forth a few times on uh online voting like okay i can do my taxes online so i should be able to blah blah blah blah and

i'm like i used to be a proponent of not not exactly like the app is rolled out now with iowa but like something akin to that right but this has kind of changed me back to paper ballots. I feel. Yeah. Yeah, definitely. Yeah. Um,

even though, as you said, it would be fairly easy to roll out, look at, look what they actually did. Yeah. As long as there are private companies like rolling things out and the source code is,

you know, uh, held up as, as private property and not, uh, accountable to anybody anybody it's the online voting should never happen and just the end of the sentence is so this uh free trial version of test fairy any app they put on it it deletes the app data after 30 days and limits the number of test users that can access the app to 200 so no more than 200 people could have gotten onto their free version of the app,

and all of the data would have been dumped after 30 days. But there are, I mean, think about how many precincts there are. Yeah, that's like 1,600 or something. Oh, really? For Iowa. Oh. Precincts, not counties. Oh, interesting.

So, I mean, like, only 200 of them can log on at any time basically yeah that was pretty funny so like that was probably if people actually found the app right might have been hitting up against that it's it's just um yeah it's just staggering how wildly uh i mean corrupt or incompetent it doesn't matter which one but uh just how monumentally it was it was fucked up and uh and how preventable it was it is interesting so and we're going to talk about seth clarman's puerto rico investments which are horrible and you know every fucking scumbag who invested and uh stole money from puerto rico you know deserves to burn in hell and all that but steve was saying that as of like...

Elon Musk is going to bring solar power to them. Steve was saying that as of like two days ago, Seth Klarman has dumped out his Puerto Rico investments. So it is something where I do kind of wonder if all of this media attention from the shadow app is starting to make, you know, some of the billionaires who might have invested in it a little nervous or a little just trying to tape down their public profile for what's going on here and maybe that's his reason for dumping out now yeah he does he does seem to have a history of um dumping things

when scrutiny comes knocking um so he's he's a fairly reclusive guy and um there was he he ran um this is maybe jumping ahead but he ran this uh he started a newspaper uh called the it's an english language newspaper called the israel times and or the times of israel and uh he ran it for about three years while simultaneously giving donations to this uh um other non or this non-profit called camera which is a backronym for committee for accuracy in middle east reporting in america and essentially that what camera is is a non-profit that is explicit they explicitly exist to critique mainstream media for any perceived criticism of Israel. So like they'll, well,

as a consumer of mainstream media, I see that all the time. The, uh, groups tactics have included taking out full page advertisements, urging supporters to pull financial backing from news outlets, such as national public radio, uh,

billboards, critical of outlets perceived to hold an anti-Israel bias. Uh, for instance, uh, quote Hamas attacks israel not surprising the new york times attacks israel also not surprising uh that's what a billboard they put up in manhattan in 2014 read and then they would send out media alerts to supporters urging them

to write letters to the editor in protest of articles uh that they deem anti-israel and then uh let's see camera president uh this. This is from an article from Horror. After that paragraph, camera president Levin denies allegations of bias, insisting camera is nonpartisan and does not take any positions politically as the material on our website underscores. So, while simultaneously donating to that through his family foundation he was also running a pro-israel newspaper so he's he's running a pro-israel uh online newspaper while funding a non-profit that is critical of um anti-israel bias in newspapers and as soon as people started asking questions about question of interest, his funding to camera stopped. Um,

I was like going through the, um, his, his family foundation, uh, tax documents in, in like 2014 and 2015. And like right when people started asking questions about three years into his,

uh, into founding the times of Israel, he just, he just stopped paying them. It's just so funny to me that they were talking about what Hamas attacks Israel. That's not surprising. The New York Times does too.

Just for those who remember, when 58 Palestinians on the Gaza border were murdered by Israeli snipers and other soldiers, 58 people gunned down, cold blood. The New York Times headline was, or the tweet about it was, dozens of Palestinians have died in protests as the U.S. prepares to open its Jerusalem embassy.

So you might remember. Coronavirus, man. They died. Who knows how? But yeah, I mean, I guess it's just like when you're a fucking psychopath, Israel Hawk, even the mildest criticism from the New York Times feels like an assault. But I think most objective people would say the New York Times has been a pretty reliably pro-Israel media outlet for most of its existence.

Yeah. So let's do some bio on Seth Klerman. He was born 1957 in May, New York City. His family then moved to Maryland because his father was a public health economist at Johns Hopkins. And shortly thereafter, as a young child, his parents divorced. Hmm. I actually I found this video of him talking about his his early life and it's it's a minute and 43 seconds and i kind of want to play it in its entirety because of how many billionaire tropes he managed to fit into this very short segment and just how weird this guy really is so um and you can also hear what a pete budaj billionaire

supporter sounds like i was business oriented as a kid. I tell the story that when I was maybe three or four years old, we were still living in New York City actually at the time, and I redecorated my room and set it up like it was a retail store and put price tags on all my stuff. Psychopath shit. In Baltimore, which we moved to when I was maybe six, I had a whole variety of businesses. I had a paper route and then a second one, which I did with friends and at one point with my brother. I had a snow cone stand in the driveway one summer. We rented a machine and we mixed the snow cone flavors and actually made the ice out of my mother's fridge.

And she was not happy because the entire freezer was storing ice cubes. I mowed lawns. Wait, this next part is really... Occasionally we had carnivals. I had a high school teacher who was a stamp and coin dealer. And on weekends I went with him to stamp and coin shows and had my own coin collection at that point. So I was involved in a variety of small-scale business ventures. I bought my first stock when I was 10 years old.

I bought one share of Johnson & Johnson with birthday money, and it split three for one the next day. I owned stocks all the way through my childhood. My mom found me a stockbroker, Max Silverman, a kindly gentleman who didn't mind a 10- and 12-year-old calling him up for quotes. At that point, you had a call for quotes. There was nothing available any other way. And I did a fifth-grade oral presentation to my class on how to buy stocks. I remember that that was somewhat different than what the other kids were presenting on. And promptly got the shit beaten out of him.

What I find is... He checks off the boxes. What I find really interesting about this guy, especially as a Buttigieg supporter, is that a lot of these billionaires really like to play up how precocious they were as a child and how they always had an interest in business um which you know goes back to the paper route thing um yeah the longer i do this podcast the more i think like billionaires are just fucking with us with the paper route thing like the illuminati got together and they were

like what if we all say we had a paper route and then anybody who looks at us all together starts connecting paper routes to all of us but yeah i mean it's like no it's like you said they are always talking about like this is you know who else had a paper route who johnny gosh the kid who was kidnapped out of des moines iowa and put into sex slavery it's all an inside john Gosch joke where every billionaire says I have a paper route to let them know that they know about the Johnny Gosch conspiracy.

He can be trusted. Every billionaire who says I had a paper route also has an app that links directly to an ankle bracelet on Johnny Gosch. It's the billionaire equivalent of I heard you paint houses. I had a paper route means I heard you know where it happened to Johnny Gosch and will keep your mouth shut.

So, I mean, he grew up in a fairly well-to-do family because of his dad, who was an economist at the Treasury Department for a while. Oh, okay. His dad went to Columbia University university which we did an episode on recently uh and i mean there's you know there's a fairly high ranking civil servant dad and his mom was a social worker so they're not really worried about like teaching his son to like buy stocks and stuff yeah and i'm sure there's like definitely he it is weird how much of an overlap he has with pete budaj himself in terms of like dad was a professor um you know i was a

precocious kid who was always going to succeed um just because i pete budaj's whole thing is, you know, he appeals to 50-year-olds by looking like the neighborhood kid who went to Harvard. He's the gay son, the perfect gay son for them. Yeah, yeah. And so, Seth Klarman, he went on to go to Cornell University and majored in economics. And then he got a job after that briefly. But then instead of pursuing that job, he went back to Harvard Business School. And he actually really got his start. And this goes into what we have to say about, what we've said for a while about Ivy Leagues, which is that it's not about what you learn in the Ivy Leagues. It's the kind of connections you make because he graduated with jamie dimon right uh the ceo of jp morgan and also after graduation uh quote four

wealthy families this is from the new york times including uh including those of two harvard professors uh gave him 27 million to manage you know friends and family llc to manage his his hedge fund which which is known which still exists and which he made his fortune off of called the bow post group and so it and that was 1982 like the bow post group was founded in 1982 and it is interesting where steve do you know the timeline that his dad was at the Treasury Department? Yeah, he was there during wartime, actually. The World War II? Yeah.

So he was at Columbia in the late 30s, early. I think he graduated in 1939. And then he started working at the Treasury in the early 40s. The early 40s. Okay, that's interesting i mean i guess like it's just interesting to me where he starts the bow post group seth clarman and so he gets you know like andy just said 27 million of uh what is it money from a harvard professor or something quote four wealthy families uh two of those are his professors yeah and so he gets 27 million he starts it or he starts running it in 1982 i

guess he couldn't get the genovese he gets uh but you know it's the timeline is almost perfectly aligned with um paul volcker and uh you know breaking the back of inflation the massive um interest rate shocks the volcker shocks that i mean really totally and permanently realigned the economy in this country now liz warren said that paul volcker was one of our great fed chairman but you know i mean it is something where i have no idea if his dad maintained connections at the treasury department if his dad was dead by the early 80s i think he died in 1999 99 so it's just something weird where it's like okay you have a treasury department dad and then your son goes into the hedge fund business and seems to do pretty well for himself well maybe

he might have had some help along the way yeah it's possible um but he's like his dad in addition to being a professional economist he was also like a lecturer yeah and like did lectures back at columbia right later in life so he's already running in some of the circles that would probably be down to try and invest in like his son's uh hedge fledgling hedge fund and at the same time you know if you have a dad who is a professor um at john hopkins university which is a fairly prestigious university you're already going to have a leg up for applying to these other prestigious universities cornell and harvard business school um which again the it's not really the education at these places that provide so much value it's connections to rich people.

Yeah. And that is entirely the value that was imparted upon him, was just getting a connection to rich people who could fund his hedge fund. Right. And that's, you know, something we talked about on the George Soros episode, among others, is like a big part of how George Soros made his money was he would just put himself in a position where he was able to have lunch with, you know, the treasury minister of X country on one day, and then the next, or even the same day have dinner

with the treasury minister of another country in the same day, you know, so it's like, even just like having these meetings, even if no, like inside information is exchanged, you're just meeting with these people on a regular basis. And you can kind of suss out who they are, how they might behave, what they're going to do next. And so just the fact that, you know, he has all these Harvard connections, his dad's a treasury guy and an economist and a lecturer. He's just running in these circles. And that does give you an informational advantage that the vast majority of people do not have access to. Yes.

So you guys did some looking into his bow post group some some of his investments in bow post group uh i mean one of the only things i could find is that he seems to be a health care profiteer which explains a lot of his aversion to bernie sanders um yeah as of as of q3 of 2019 bow post group llc i looked up their current holdings and among the top five or so, like you've got, well, Fox News Corp and Liberty Global PLC,

which we've covered. And another group called Chenier Energy Inc., which is a U.S.-based exporter of liquefied natural gas. It's worth noting that Buttigieg has kind of softened his climate change rhetoric as his campaign has progressed and gotten more of these Seth Klarman types to invest in him.

Yeah, so he has, let's see right now. So that's their current holdings. He had a kidney care company, uh, Carrick's biopharmaceuticals and, but they, uh,

they merged and converted into, uh, Akiba therapeutics or yeah. And so, yeah, there's like a good deal of representation from pharma and health care um they have takeda takeda biotech about 172 million all who would take a hit yeah under bernie sanders presidency well it's kind of interesting also just like uh looking through

his reading his wikipedia article where it talks about uh his hedge fund being founded in 1982 says that and then it immediately the bow post group founded in 1982 then it immediately skips to the 2008 financial crisis so there's just like no indication of what they were doing in between yeah he he talks about his long-term investing plan as uh investing, which is a nice and vague bullshit term that is also used by the Oracle of Omaha, Warren Buffett. And sometimes Seth Klarman is compared to Warren Buffett, not financially by a factor of, I don't know, 20. But he's called the Oracle of Boston. And I guess Paul Singer said that if you invest in anyone else, it would be Seth Klarman.

Interestingly, Klarman, well, he doesn't have a, he claims not to have a Bloomberg terminal in his office, which honestly, that's a good way to save money because those things are bullshit. But he says he doesn't need like quick access to stocks because because of his long positions he doesn't need to do quick trades yeah unlike um the guy we were talking about the other day joe simons or simmons jim simmons yeah jim simmons jim simmons the architect yeah so like clarman's Klarman is a value investor and like Warren Buffett and Warren Buffett's, his mentor, Ben Graham, who's kind of seen as like the originator of value investing.

What they try to do is they have, they try to find a core of companies that they believe like their intrinsic value is lower than where they think it ought, where it's currently trading. So they believe it has room to grow in some sense. And they use all sorts of metrics to find companies that they believe are undervalued in this way. And like they'll look at like price to earnings ratios or price to book ratios,

the book value being like how much shares outstanding were cost to obtain the cost it took to obtain those shares relative to what they're trading at right and they go through all these metrics and there's an entire like ben graham is famous for um writing a book called securities analysis um decades ago it's sort of like the gold standard of value investing now some people say it's not really relevant anymore because it looks at like what it's what it's trying to say oh like the gold standard what it's trying to say is the value of a company it often focuses on like the tangible assets of a company of all of its point like how much is the all of the tangible assets of a company of all of its point. Like how much is the,

all of the physical stuff of this company worth versus how much it's being, the company is being traded at in terms of like its market cap or something. Right. And that's just a general sort of idea of what is going on with Ben Graham. And so Warren Buffett took those ideas and turned it into value investing, which didn't exist. That term didn't exist before Buffett. Right ideas and turned it into value investing, which didn't exist. That term didn't exist before Buffett. Right.

And it, it, it always seems to me like it's, it's a bullshit term. Cause it just means like, uh, invest in a company or like the, the idea that all these companies are undervalued and you just have to find

them seems, uh, kind of specious. And at the same time, the whole idea of investing is investing in a company that is going to increase in value like it's um it it seems to just be a kind of clever marketing to say that like if i'm investing in something that means it's going to increase in value right uh i mean so value investing is often contrasted to growth like growth investing where you find like companies that are able to

expand very quickly will also have an expand a commensurately expanding stock price oh where's value yeah so like their value they're actually these two categories are so deep in the literature nowadays that they're actually entire like they're what's called quote value stocks and growth stocks and they're like they'll like there are reams and reams of of pages of people saying like this is a value stock this is a growth stock and they go through different metrics that say that it is and like uh i have a book right over there actually 100 best stocks of 2020 where they actually do this it's like they're they're actually like eternal categories of stocks now speaking of books apparently seth clareman wrote an investing book

that now um is a collector's item like the original print goes for $3,000. Yeah. It's called Margin of Safety. It was written in 1991. And it shows how smart these Wall Street guys are that they can't just find a fucking PDF. It's kind of a collector's item now. Yeah. So like if you go on Amazon and search Margin of Safety

you can get like a used like a used copy is like average of like twelve hundred dollars now yeah but they know that if you read the first word of every chapter it will tell you where johnny gosh is buried so i like i read a couple there's a couple pages are stuck together there's a couple reviews of margin of safety sorry there's a couple reviews of margin of safety out there and uh there's also PDFs, but it doesn't seem to affect the price for some reason.

But the reviews of the book say, like, this is basically just sort of a layman's accounting of what value investing is. Right, right. And it lays out some of his, like, personal spins on the concept. I mean, I guess as a collector's item, you can, like, put it on your bookshelf and be like, this is uh this is the version that martin squarelli jerked off into

i wanted to go back andy you were saying hedge fund billionaire paul singer praised him yes did he say something like if i were to trust anyone else to pry development aid out of the hands of babies dying of cholera in the Congo, it would be Seth Klarman. Because Paul Singer is one of, if not the most evil billionaire on the planet Earth. And we talked about this a lot in our episode. But the entire thing is, you know, when we talk about value investing, a lot of this is government or regulatory risk or whatever you want to call it that causes the values of stocks to be uncertain. So, you know, singer and seth clarman went in big together in puerto rico buying up debt and essentially going to puerto rico yeah just lobbying the

government to impose austerity and pay them back at full value and that's you know that kind of thing has been paul singer's entire modus operandi oh yeah this is like when he says value investing this is not only the value of stocks but also of like sovereign debt and stuff like that. So, Seth Klarman's whole approach of value investing and like what's really that where he picks a core of companies that are sort of themed out on the basis of being undervalued relative to some metrics, a price to earnings ratio or price to book, that can be contrasted pretty starkly to another hedge fund we've covered, Renaissance Technologies. It's headed by Jim Simons, who we did an episode on on the Patreon side. So Klarman is taking out very long-term positions relatively speaking for a hedge fund and he also uh is fairly risk averse he runs a conservative business he has uh markedly

more cash on hand than most hedge funds like more of his assets are in cash and money market stuff rather than stocks and debt and other things right he says he only takes out um he only takes out loans for uh property investments yeah so he's running a pretty conservative game and his average annual return since inception of his company has been about 17%, which is lower than the S&P 500 over that same time period. But once again, sort of the reasoning that he says that's okay is because during downturns, you know you can count on him to make it to reduce the loss in price of your assets. So he mitigates, there's less volatility.

Right, right. So during the downturns, it won't go down as much. During the upturns, it might not go up as much either. But then again, your money is safe. And this is very, very, very, very much at odds with Renaissance Technologies, which has insane gains in the upturns and pretty bad gains in the downturns also. But they do it through high-frequency algorithmic trading

as opposed to positions that can take as long as a couple of years to play out, as is the case in Seth Klarman's case. Right, right. Well, and we say this every hedge fund episode, but it's worth restating that he's below the S&P 500 before he charges his fees, which are typically 2 and 20. 2% of all assets under management is the fee you pay to him every year and 20% of all the profits.

And just kind of like a minor laugh, the fact that he's compared to Warren Buffett and called the Oracle of Boston. Warren Buffett has actually issued a challenge for people to find five hedge funds that beat the S&P 500 over a 10-year period, and nobody's been able to do it. And that's kind of like a big thing is Warren Buffett actually, whatever you think of his personal politics, is a smart enough investor that he recognizes S&P 500 index funds. Passive investments seem to do usually much better than managed investments.

And in Buffett's case, monopolistic investments do the best. I don't know about if it's a 10-year period that they do but renaissance technologies has like sometimes wildly beated the s&p 500 and as we talked about a bit in that episode um like some of it came down strictly to like tax tax avoidance measures and uh insane like insane amounts of uh brain drain from the like the hard sciences to get people to devise these algorithms and stuff but that's like basically a one-off exception and hedge funds as a group largely underperformed the S&P 500. I'm so glad all those people working on that coronavirus cure switched over to a hedge fund algorithms but anyway so that's sort of like in a nutshell what he's doing with value investing that's why

people keep dying in palestine coronavirus man it's it's shooting children uh but yeah i mean like you know and so like any hedge fund set Seth Klarman, of course, close with Paul Singer, they go in on Puerto Rico. But just to go through the financial crisis real quick is, you know, he's his hedge fund or one of his companies actually sued Bank of America over these kind of mortgage mix ups. All of these hedge funds and Wall Street firms and whoever were playing hot potato with mortgage-backed securities. And then the music stopped and a bunch of people who got left holding the bag had to throw 10 million people out on the street. There were about 9 or 10 million foreclosures between 2006, 2014. So just from a Hedge Clippers article on Seth Klarman, his hedge fund currently has holdings, as of the time this was written, I believe it was 2018, currently has holdings in Aquin Financial, O-C-W-E-N Financial, which in 2013 settled with the Consumer Financial Protection Bureau for $2.2 billion over allegations that it, quote, violated federal consumer financial laws at every step of the mortgage servicing process, unquote, and provided false or misleading information to consumers about the foreclosure process. And again, you know, it's complicated. We've talked about it a lot. But, you know, the Obama administration offered something called HAMP, Homeowner Mortgage Modification Program, or whatever it was.

And what was happening all over the place is mortgage servicers were engaging in what is called dual track foreclosure, where you keep collecting the fees and you tell people that you're modifying their loan under HAMP. But then on the other hand, you are actually continuing to move forward with foreclosure. That's illegal happened all the fucking time and just people who thought they were they had come to an agreement to stay in their home were paying out these fees with no idea that they were being kicked out because the the servicers will just pretend to lose paperwork pretend you missed a payment throw you out on the street because they want your home happened all over the place and these people paid a slap on the wrist fine and nothing happened they stole millions of. Happened all over the place, and these people paid a slap on the wrist fine, and nothing happened.

They stole millions of homes. Yeah, and this is the result of an almost eight-year-long investigation of literally hundreds of thousands of claims from consumers against these people. Well, on the other hand, his Claremont Family Foundation gave $40,000 to the Phillipsbrook house association incorporated,

uh, to support installation of air conditioning for Y2Y Harvard square homeless shelter. Oh, yeah. It's a little bit good. A little bit of bed, a little bit of,

yeah. He also, um, this is from his, I've got the Claremont foundation, his family foundation, uh, public tax records gave to project bread,

the walk for hunger incorporated. He gave 25 Project Bread, the Walk for Hunger Incorporated. He gave $25,000 while at the same time supporting the candidate who... He worked for a company that was fixing bread prices. Both of these cases are just, they show kind of... No one cares about canadian ontarian bread consumers like whatsoever it it shows the the hollowness of charity in the face of systemic issues like you know these people to hold up charity as uh just you know and we we've hammered

we've beaten this dead horse time and time again that, you know, these billionaires hold up their charity as evidence of their inherent goodness. But, I mean, clearly with one hand, they're giving crumbs, while on the other hand, they're just taking away... Crumbs? Yeah.

I heard you were fixing crumb prices. But yeah, no. I truly loaf these people. But yeah, and like just to kind of hammer the point home, Hedge Clippers also points out as of December 2017, about 23% of Baupost, the hedge fund, about 23% of its public equity investments were in oil and gas companies, totaling about $2.3 billion. So, you know, he talks about climate change or any Democrat who

talks about climate change. If they're taking money from a guy where 23% of his investments are in exacerbating climate change, that shit is never going to have anything done about it ever yeah just this week a kid asked uh pete budaj at a campaign event like so in order to you know fight climate change will you make a commitment to stop taking money from billionaires who invest in fossil fuels and uncharacteristically pete budaj just goes, no, walks off. And Klarman is also a trustee at the conservative think tank, the American Enterprise Institute, which has published various papers engaging in climate change denial. It also published a paper advocating the privatization of the Puerto Rican energy utility, which, of course, would massively benefit his almost $1 billion holdings in Puerto Rican debt that he has just recently unloaded. But I mean, it's just interesting where all these little networks come together to serve

his financial interest. And then you also found that he had some associations with PG&E. Right. So I mean, I think actually we might want to just do the Puerto Rico thing and then we can continue it to PG&E because it seems like they're trying the same playbook. PG&E is, of course, the California utility, which has just recently announced that it's going to try and go through bankruptcy because of all these wildfires in California that are very clearly have been caused by PG&E just not investing in equipment update or anything like that and all these fires going through. But it is something where Paul Singer's entire MO and Seth Klarman seems to have like kind of been a little feeder fish on him for some of this stuff has been to go in and buy up

distressed debt and then to lobby and sue everybody he can to get paid back on that debt at 100 cents on the dollar or as close to that as possible. And so they tried that pay book playbook in Puerto Rico. paid back on that debt at 100 cents on the dollar or as close to that as possible. And so they tried that pay book playbook in Puerto Rico. And now with PG&E and the distressed debt it has, it seems like they're trying that same thing in California. Yeah. So like in value investing terms, I guess the value proposition is that these things are these utilities are too big to fail.

And whichever municipality is charged with the welfare of these consumers will step in. And you're going to get your money back. No matter what. You're going to be guaranteed. And it kind of places a premium on him getting his money back versus PG&E actually investing in their own infrastructure in California. The kind of infrastructure that's breaking down and starting these wildfires. Yeah, I was reading some Wall Street analyst reports on what could happen with PG&E. And back before the bankruptcy, there was more clarity on the bankruptcy proceedings.

They said, well, either they could use the bondholders' plan, which is that more of the money obviously streams to them, and PG&E has less to work with in terms of upgrading its capital infrastructure for the next crisis. Or they could use PG&E's proposal, where they do do those things, and then the bondholders get less and in the first in the first case pg and e the company is just plunged into dire circumstances as far as they're the lesser shareholders are concerned like they're that the wall street analysts are saying like well if they use the bondholders plan then the company is on worse footing in terms of it's

running its actual business and therefore smaller shareholders will footing in terms of it's running its actual business. And therefore, smaller shareholders will suffer in terms of the share price. And if they use the PG&E plan, at least you're giving them a lifeline. Right. Yeah. And so as this bankruptcy proceeding progressed more, the court started ruling more in favor of these large bond and shareholders and saying like all right this is taking too long you'll need to work this out and he's pointing to these large shareholders instead of like the you know the company and the state of california like coming

together for a plan or something so clar Klarman's hedge fund group, they loaded up on 14.5 million of PG&E's shares in 2017 before the fires really got into full sway. His stake ended up being worth about 900 million at the end of that year. At the same time, though, he did something kind of sly where he also took on an insurance policy on behalf of another company.

So he bought the insurance plan on PG&E's, their equipment that they were using, and through a process called subrogation. And he sort of assumed the responsibility of making good on those insurance claims. And so he's sort of actually hedging, well, it's a hedge fund, so he's obviously he's hedging. And this is how he did it. He had an insurance plan against basically a fall in his share price for his holdings of PG&E stock effectively. So, in either case, he stands to gain a bit. And this insurance plan is collectively worth about $1 billion. There's a billion dollars worth of claims against the power company. And it's still up in the air what what exactly will happen with that as of uh last quarter right and hedge clippers

goes through pg and he actually went through bankruptcy in 2001 and uh the bankruptcy courts uh placed about seven billion dollars in costs were passed on to rate rate payers so there was like a jack up in prices for california utility consumers because of this bankruptcy so a lot of people speculate that this bankruptcy is just a way of getting permission which they would not otherwise get in order to jack up prices on rate payers uh and you know as you know a guy who has a now a big stake in pg&e he can say that i'm in front of the line to get money out of this bankruptcy or whatever other process the government in California ultimately goes through. Yeah. So like these insurance claims, if the bankruptcy court proceeds as it often does in California, these insurance claims will be treated as if they were senior debt. So they're first in line to getting repaid.

Right. And they followed that exact same playbook in Puerto Rico, apparently successfully. We don't know how much actual profit they made when they exited their position just recently, but it was entirely buying up this distressed debt and then lobbying politically, suing in court, doing everything they can to say, we are front of the line. You have to pay us back as close to $1 on the dollar as possible.

You know, you can't give us a haircut, no haircuts. And, you know, we can even just go through the Puerto Rico story here. According to Hedge Clippers, in 2015, Baupost, his hedge fund, began buying up debt under the guise of 10 different shell companies in Puerto Rico. His investment was not discovered until The Intercept did a story in October 2017. He admitted it, said, quote, I don't like to be attacked, and was, quote, worried about people copycatting his firm's investment. But I think it is much more cynically. He just, you know, people recognize when you're being a fucking vampire. This is literally just a hostile takeover of a public utility. And so his group...

This is what you would do. Like, this is very analogous to a hostile takeover just of, like, a public stock of a company yeah his group was uh bought about 933 million dollars in cofina bonds um these things were for a time trading at like 40 cents on the dollar as opposed to that face value he paid so if he sold them at market uh back in uh 2018 he would have you know lost about half... We don't know exactly what he bought them for, but probably wouldn't have made any particular profit there. But it's just interesting where in April 2019, Hedge Clipper's article kind of goes through what happened with these Puerto Rican bonds, is the Puerto Rico Electric Power Authority, that's PREPA, P-R-E-P-A, in April 2019 reached a deal to settle more than $8 billion in debt.

In various hedge funds, including Paul Singer's Elliott Management, Seth Klarman's Bowpost, they got in this deal between the Financial Oversight and Management Board for Puerto Rico and PREPA bondholders. it calls for customers within Puerto Rico to pay an annual per kilowatt hour charge through the year 2067, which amounts to Puerto Ricans paying more than 23 billion US dollars throughout that period. So everyone in Puerto Rico, a country where more than half of the children there live in poverty, are paying these extra utility charges until the year 2067. Under the PREPA agreement, again, quoting from Hedge Clippers,

even residents and businesses that generate their own electricity, for example, through environmentally friendly solar panels, will have to pay the debt charge. So no matter what you are doing, you have to pay money if you are in Puerto Rico to Seth Klarman. So even if your meter is just shut off, you you have to pay money if you are in puerto rico to seth clarman so like even if your meter is just shut off you still have to pay like your electric meter yep and yeah this is like a head tax almost effectively again quoting effectively rates will increase 13 over the next 12 months with an average residential household paying an extra 130 dollars per year by 2021 an extra 220 dollars per year by 2043

u.s dollars prepa bondholders which includes seth clarman however were granted a favorable lien position in the deal ensuring that every rate payer dollar goes to paying off the debt well i mean it's their fault for getting hit with a hurricane and then dying in massive numbers from disease and see we should probably lowering the total number of people who can uh pay right i think i'm very pro-personal responsibility and i think the puerto rican people should start taking responsibility for uh for what's going on over there and let's let's just put it out there that the total hurricane maria death toll is 3057 it's insane again which is like i mean how many 9-11s is that like one 9-11 one and a half one and a half nine

one and a half no no i guess that no 9-11 was almost 3000 yes that's one nine eleven um so i guess we should well um we're getting towards the end here so i guess we should, um, we're getting towards the end here. So I guess we like to close out. We should take a look at, uh, a few more of his, his charitable donations. Uh, unless you guys have anything else on his, um, business dealings. I mean, the only thing I would say is his lobbying and, uh, his donations to Republican politicians again. And I think the 2016 cycle, he gave about $3 million to Republicans, including Marco Rubio, Paul Ryan, etc.

There was what was called the PROMESA legislation that passed the U.S. Congress in 2016, which really set up this entire structure under which he was able to impose this tax on Puerto Rican ratepayers, all of these donations to various political parties resulted in this legislation, which was, of course, signed by President Obama. And, you know, like Steve was saying, he cashed out his position probably at a profit just recently, maybe to avoid scrutiny, but he was only able to cash it out at a profit because of this legislation and because of this deal where the Puerto Rican Energy Authority reached this deal with the bondholders to put these extra charges on a territory where half of the people are half of the children, more than half of the children are living in poverty.

These people cannot afford to pay and they are being bled dry by these hedge fund fucking vampires. And it's entirely about his charitable and his political donations and now he's trying to do the same thing to the democratic party you know uh fucking get his tentacles into all the little upstarts and just every single aspect of policy will be influenced by that money that he is spreading around right now well not all of his donations are entirely about making money. Some of them are passion projects. I wanted to come back to the Times of Israel, the paper he founded, the English language paper that was meant to give a new perspective for the Israeli people. They ran an op-ed titled When Genocide is Permissible that was immediately taken down, but it argued that, uh, it's okay to commit for, um,

the Israelis to commit genocide on the Palestinians when it's a matter of personal survival. Um, he also donated, he's a prominent, he's prominently listed on the, uh, donors list for the CIA officers Memorial foundation.

Interesting. Um, which has given out awards to, uh, or they have the Richard M Helms award, um, for exemplary service. And some names out awards to, or they have the Richard M. Helms Award for exemplary service and some names on here include 2017 Madeleine Albright, who you may remember from the genocide of the Iraq sanctions regime in the 90s. And this classic quote,

We have heard that a half a million children have died. I mean, that's more children than died in Hiroshima. And, you know, is the price worth it? I think this is a very hard choice, but the price, we think the price is worth it. So that's 2017 winner Madeleine Albright. winner madeline albright uh 2014 well 2015 winner is president george hw bush which who uh loved grabbing asses and spreading lies about incubators uh 2014 uh winner of the prize is henry kissinger whose hits include a a massive bombing campaign in cambodia that we all know about that killed at least 100 000 civilians and set the stage for the Khmer Rouge. Also, he made Laos the most bombed country in the world.

Vietnam, of course, he sabotaged the peace talks. East Timor, he instructed the Indo-Vietnam government to wait to carry out their genocide until he left the country so it wouldn't look bad. And he also supported the Pakistani mass murder in Bangladesh. And the reason I bring all this up is I get the feeling that this man, Clareman, is pro-genocide as long as the good guys do it. And do you guys have anything else? Well, I guess the last thing I wanted to just mention

is Harvard University. Because another thing that Hedge Clippers went through pretty well is Harvard's endowment, which is the largest college endowment in the world. As of September 2017, it's about $37.1 billion that Harvard invests to make money for its endowment, for its university. Harvard's endowment, according to Hedge Clippers, has about 5% of its entire endowment is invested in Baupost hedge funds, Seth Klarman's hedge fund.

Again, according to Hedge Clippers, Harvard's endowment is invested in bow post hedge funds, Seth Klarman's hedge fund. This is, again, according to hedge flippers, Harvard's endowments largest single position, they apparently have almost about $2 billion invested just in bow post hedge fund. So it's like, why is Harvard making such a comparatively huge investment in his hedge fund compared to, you know, all their other investments where they kind of spread the risk around. And Hedge Clippers kind of goes through this. I'll link the article in the description of the episode. I recommend people read it. But it talks about how he's making these kind of charitable donations to Harvard,

which are tax deductible, while at the same time he's managing Harvard's investment, which he's making a profit on. So the very money he's giving to the endowment is flowing back to him, and he's making a profit off it. And it's something where, just according to Hedge Clippers, the annual management fee on a $2 billion investment alone, this $2 billion that Harvard gives him, the annual management fee that he's collecting from Harvard could be $20 to $40 million per year. So that's before performance fees and anything else. Harvard is paying this guy $20 to $40 million a year just for this management of the money, and it's not clear that he's even beating the S&P 500 or even making them a profit doing that. From Hedge Clippers, in 2016, it lagged the S&P 500's return. In October

2017, through the year, it was only up 3%, far behind the S&P 500, which was up over 10% over the year. Again, this is before fees. So Harvard is dumping all this money with him. They're probably losing money compared to giving it to the s&p 500 and it's not clear why except that he makes charitable donations to the university and seems to have some connections political connections with people at the university yeah i mean of course there's also the argument that there's quote less risk when you invest in the hedge fund but well i mean we should say it's not possible to invest directly into the S&P 500 unless you buy every single holding of the S&P 500. So it's very hard to replicate the results exactly.

But you could, like, in theory, you could find two to three broad index or ETF funds, which largely attract the S&P 500 and do commensurately well. Also, one bizarre thing, speaking of elite universities, that I found in the Klarman Family Foundation tax returns was everything's subcategorized, all the different charities or organizations that he gives to. And under the category of connections to Israel, he lists giving $150,000 to MIT. Epstein Media Labs, baby. Yeah. to israel he lists giving 150 000 to mit which epstein media labs baby yeah but joey ito somewhere in there but it just like you know and we really should do a future full episode on the ivy leagues and the absolute barrel of corruption that these things have become

according to hedge clippers also uh uh yale and prin and Princeton have a combined $1.7 billion invested with this guy's hedge fund. But the last thing I wanted to mention, according to Hedge Clippers, Harvard University's share of Baupost Hedge Fund's Puerto Rico bond holdings, if it's similar to its holdings of his hedge fund, it means Harvard University has an interest in an estimated $60 million in Puerto Rican debt. This is the richest university by endowment on the planet Earth, has a big position in starving Puerto Rico

and imposing austerity on the citizens there. It's a horrible thing to imagine. And the Harvard Endowment Fund has actually come up before on this podcast when we covered IKEA ikea right yes so the the romanian forestry claims uh springing from like the pre-revolution romania uh harvard actually harvard's endowment actually hired a few agents to go and buy up like ill-gotten parcels of forestry for millions of dollars and that went on for years so I mean these guys have their

hands in mini pies don't feel bad for the Puerto Ricans there's like you're crazy we don't really have time to get into it. But there was also a story in 2012. They were buying up in Canada. They were buying up farmland. His hedge fund was in the Melecton Township. M-E-L-A-C-T-H-O-N. The township.

It's about 120 kilometers north of Toronto, Ontario. They were buying up farmland in the township telling people they were going to do potato farming there. And then in actuality, they were trying to merge all the land to do a limestone quarry, like do limestone mining that would have apparently deeply contaminated the groundwater for the entire area, one of the largest quarries in the world. And then there was a massive public reaction and they had to back off it. But, you know, again, this just kind of shows the type of person you're dealing with, a deeply deceptive guy who doesn't give a fuck about anything except making money.

You tried to poison groundwater. No, I worked for a company that worked for the company that tried to poison groundwater. Clients who wanted to poison groundwater. Well, thank you guys for listening. This has been Grubstakers. Let's wish Bernie the best in New Hampshire that's either coming in as you're listening to this

or is already done. I also am just going to sneak a plug in here if you're listening to this on the 11th. I have a cartoon that I've been, just a god-awful cartoon that I've been, just a god-awful cartoon that I've been working on for years that's premiering at Channel 101 at the Spectacle Theater in Williamsburg, Brooklyn.

So go check that out and vote against it so I can finally be freed from this multi-year project that's been eating away at me. And with that, this has been Grubstakers. I'm Andy Palmer. I'm Steve Jeffers. I'm Sean P. McCarthy. Bye-bye.