Paloma Partners’ Donald Sussman had a bang-up 2018.
First, his multistrategy quantitative hedge fund beat the odds to post a positive performance.
Secondly, on a personal note, the longtime Democratic donor spent more than $25 million backing Democrats in last year’s midterm elections — and got results when the U.S. House of Representatives turned blue.
The $4.4 billion Paloma, one of the oldest and quietest hedge funds around, ended the year up 3.3 percent, according to a person familiar with the numbers. It returned 45 basis points in December, this person added.
Sussman took a conservative position during 2018, expecting a decline in markets and an increase in volatility, the person said.
Last year’s market downturn — the Standard & Poor’s 500 fell 4.4 percent — hurt quants, which did poorly overall. Hedge Fund Research’s quantitative directional index fell 5.18 percent, and its equity market-neutral index slipped 1.21 percent.
Several other quants outperformed, however — including Sussman’s biggest success story, D.E. Shaw Group, a firm he put on the map in 1988 with a $30 million seed investment. (In addition to running Paloma since 1981, Sussman is known for his eye for talent, which has led him to invest in some big winners. He continues to seed new hedge funds, with an emphasis on quants.)
While D.E. Shaw has moved away from being a pure quant shop, its flagship composite fund returned 11.2 percent in 2018, according to a person familiar with the numbers. The gains came from both quantitative and discretionary investments, the person said.
Another quant winner was the Renaissance Technologies Institutional Equities Fund, which gained 7.66 percent, according to investment bank HSBC’s weekly report tracking hedge fund performance. For Renaissance, it was something of a comedown: the fund had posted double-digit gains in the previous four years.
Spokesmen for all three funds declined to comment.
Last year’s political shift in Congress might have been more exciting to Sussman, given that his donations in the 2018 Congressional elections went to Democrats, who gained control of the House.
Sussman gave a total $25,945,100, making him the third-biggest donor to Democrats, behind only Michael Bloomberg ($90.5 million) and former hedge fund titan Tom Steyer ($70.8 million) — both of whom have toyed with running for president themselves and who ranked second and third on the list of donors.
The Paloma founder was the fifth-biggest donor to the Congressional elections and the top one among hedge fund mangers, beating out Renaissance’s Jim Simons ($22.8 million), Citadel’s Ken Griffin ($19.2 million), and George Soros ($18.8 million), who ranked sixth, seventh and eighth, according to the Center for Responsive Politics. (D.E. Shaw founder David Shaw ranked 71st, giving a little more than $2 million, all of it to Democrats.)
Sussman’s largesse in politics earned him a place on Worth magazine’s Power 100 in 2018, the first time the hedge fund manager was on the magazine’s list of the most important people in finance. He ranked 37th.
