The economic plan of Republican Presidential candidate Mitt Romney is that would be entrepreneurs should borrow money from their parents to start their businesses. He often cites an example during his campaign speeches, and apparently believes that every family, just like his, has $10,000 sitting around as pocket change with which to endow junior or juniorette with start up capital. This is not illogical on Mr. Romney’s part, after all everyone he knows has that kind of pocket change.
Carl Icahn is a multi-billionaire investor who has obviously been successful. So Mr. Icahn can afford more than $10 k to give to his son to manage, a lot more.
Carl C Icahn, the septuagenarian hedge fund manager and activist scourge of US boardrooms, has given $3bn of his fortune to his son Brett, to help the 33-year old hone his moneymaking credentials, according to US regulatory filings.
But the money is not without conditions attached. The son, Brett must earn a profit on the fund.
Under the terms of the agreement with the junior Icahn and Mr Schechter, the pair will each be entitled to 7.5 per cent of all profits made from the $3bn they have been given to manager in a “one-time lump sum payment” in four years’ time,
And not just any profit, but a whopping rate of return.
provided they earn returns of 4 per cent annually.
Yes, that’s right, Carl’s offspring must earn a 4% annual return. Talk about setting the bar very high! Of course, while earning that extraordinary we are certain Carl junior is also getting a handsome salary, like in the million.
So at the end of the day if the fund just earns the minimum Carl junior and his partner get 7.5% of 4% of $3.5 billion x 4 which is a nice payment of $42 million for returning (after fees and expenses) far less than 4% to the investors. And they say hard work in
To be fair Icahn junior has managed a small fund and apparently done quite well,
Since 2010, he and Mr Schechter, a former Deutsche Bank trader, have been managing a $300m pot of Mr Icahn’s fortune, known as the “Sargon Portfolio” which they have nearly doubled in value, according to filings.
But then one can probably do pretty well if daddy gives you $300 million to manage along with all of his expertise, staff and support.
Gosh, we just can’t wait for the Icahns’ to show up in a Mitt Romney ad. And we certainly expect every American to have the same opportunity, except of course those too lazy to work or those too stupid to pick wealthy parents.