Monthly Archives: April 2013

2013’s 25 Highest Paid Hedge Fund Managers – No African Americans


By William A. Foster, IV

Wealth will set us fucking free, okay? ‘Cause wealth is empowering, wealth can uplift communities from poverty, okay? – Chris Rock

This past week Institutional Investor’s released its annual ‘Rich List’ of highest paid hedge fund managers of 2013. These 25 gentleman earned a combined $14.14 billion in 2012. Yes, that was billion with a B. Just to make the list a hedge fund manager had to make $200 million in the recorded fiscal year. The median earning according to Institutional Investor was $350 million. The king of the list was David Tepper, the hedge fund manager who once in 2011 accidentally left his ATM receipt (shown below) showing $100 million in his savings account, earned $2.2 billion. Yes, in one year David Tepper earned more money than what is in the combined coffers of all 100 plus HBCU endowments. Yet, the list in its twelve years has never had an African American present on the list.

TepperATM_receipt

What is a hedge fund? According to Investopedia, it is an aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns. Legally, hedge funds are most often set up as private investment partnerships that are open to a limited number of investors and require a very large initial minimum investment. Investments in hedge funds are illiquid as they often require investors keep their money in the fund for at least one year.

The minimum investment most hedge funds require varies between $500 000 to $1 million. More established hedge funds can have even higher minimums. Hedge fund managers are able to make a tremendous amount of money because of the industry unwritten rule called 2 and 20. This refers to hedge fund managers charging a 2 percent fee on investments in the hedge fund and receiving a 20 percent cut of all profits generated by the fund. To say this is a lucrative rule, one only needs to look at the list of earning by the top hedge fund managers. If a hedge fund gets 10 investors (individuals or institutions) to invest $1 million each to create a $10 million pool before any investments are even made the 2 percent rule has generated $200 000 in fees for the manager. Assuming the fund turns than $10 million into $110 million then the hedge fund manager would receive $20 million for a total of $20.2 million in earnings. As long as the hedge fund produces its promised returns then investors will continue to pour money into it.

African America’s top ten earners from 2012 were in the fields of sports and entertainment combing to earn approximately $700 million or an average of $70 million a piece. Meanwhile, the top ten earners for hedge fund managers over that same period earned a combined $10.1 billion or an average of $1 billion a piece. This means that the income gap that exist between African America exist even in the upper echelons. In this case, African America’s top ten earned $0.07 for every $1.00 European America’s top ten earned.

The reality that all of African America’s top earners are still represented by being labor of the sports and entertainment industry (minus Oprah Winfrey) continues to highlight some very disturbing social trends and economic miseducation of what really constitutes wealth and power. Hedge fund managers not only control their own wealth but often the wealth of families, other wealthy individuals, institutions (like college endowments), and the ability to dictate the actions and operations of entire companies. If they miss a proverbial “shot” it can wipe out entire communities and families. Therefore, they are afforded a great deal of power within the realms of finance and society. On the other hand if LeBron James misses the game winning shot in the 7th game of the NBA championship its impact is minute at best.

It is time we become more strategic and provocative about our placement of our intellectual capital versus physical capital. We promote education and intellectual development as our upliftment and yet at the apex we continue to see those who will entertain in different forms and fashions reaping rewards whose ripple in terms of power for the African American community is miniscule at best. If there is an assumption that we are closing the gap it is because we would rather put on rose colored glasses than look at the reality – one man makes 300 percent of our ten highest earners. Unfortunately, even roses have thorns.

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2012’s Top Ten Earning African Americans


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The top ten earning African Americans earned approximately $700 million last year. It should be noted that these are pre-tax and pre-fee earnings. Because the majority of African America’s highest earners still earn their money through sports and entertainment their earnings are considered earned income by IRS definition and taxed at the highest tax rate which this year is almost 40 percent. Couple that with their agent fees (byproduct of being in the entertainment industry is a need for endless amounts of handlers) that average in the range of 10 percent, the group of ten will pay out almost 50 percent of their earnings. Chris Rock is famously quoted as saying “Shaq is rich, the white man who signs his check….is wealthy.” The income disparity between the top ten earning African Americans and European Americans is a staggering $0.07 for every $1.00 while the overall income gap between African Americans is $0.52 and $0.62 versus Asian Americans and European Americans, respectively.

1 – Oprah Winfrey

Salary: $165 million

Source: Ms. Winfrey owns Harpo, Inc. which owns 50 percent of OWN. OWN which has operated in the red since its inception is estimated to break even this fiscal year. Thankfully, Ms. Winfrey still profits greatly from syndicated shows under her company such as Dr. Phil and others.

2 – Andre Young

Salary: $110 million

Source: Better known as Dr. Dre, his place as the number two spot is due to a one-off moment where HTC paid $300 million for a majority stake in the company that operates the headphones that carry his name Beats By Dr. Dre. Mr. Young owned one-third of the company at the time of the sale.

3 – Tyler Perry

Salary: $105 million

Source: Movies

4 – LeBron James

Salary: $53 million

Source: Miami Heat and endorsements

5 – R. Rihanna Fenty

Salary: $53 million

Source: Music and endorsements

6- Kobe Bryant

Salary: $50 million

Source: Los Angeles Lakers and endorsements

7 – Sean Combs

Salary: $45 million

Source: Endorsements, Clothing, Marketing

8 – Floyd Mayweather

Salary: $40 million

Source: Boxing

9 – Beyonce Carter

Salary: $40 million

Source: Music, endorsements, clothing

10 – Shawn Carter

Salary: $38 million

Source: Music, endorsements, marketing, invest

Source: Forbes

Student Debt Profile By Conference (School By School) – The GCAC


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Dillard University

Average debt of graduates, 2011 – $36 241

Proportion of graduates with debt, 2011 – 96%

Nonfederal debt, % of total debt of graduates, 2011 – 18%

2010-11 Pell Grant recipients – 67%

Edward Waters College

Average debt of graduates, 2011 – N/A

Proportion of graduates with debt, 2011 – N/A

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 83%

Fisk University

Average debt of graduates, 2011 – $27 345

Proportion of graduates with debt, 2011 – 77%

Nonfederal debt, % of total debt of graduates, 2011 – 37%

2010-11 Pell Grant recipients – 59%

Philander Smith University

Average debt of graduates, 2011 – $35 000

Proportion of graduates with debt, 2011 – 96%

Nonfederal debt, % of total debt of graduates, 2011 – 0%

2010-11 Pell Grant recipients – 76%

Southern University at New Orleans

Average debt of graduates, 2011 – N/A

Proportion of graduates with debt, 2011 – N/A

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 83%

Talladega College

Average debt of graduates, 2011 – N/A

Proportion of graduates with debt, 2011 – N/A

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 85%

Tougaloo College

Average debt of graduates, 2011 – N/A

Proportion of graduates with debt, 2011 – N/A

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 77%

Xavier University of Louisiana

Average debt of graduates, 2011 – $26 106

Proportion of graduates with debt, 2011 – 83%

Nonfederal debt, % of total debt of graduates, 2011 – 25%

2010-11 Pell Grant recipients – 59%

Source: Project on Student Debt

The HBCU Endowment Feature – Talladega College


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School Name: Talladega College

Median Cost of Attendance: $17 996

Undergraduate Population: 712

Endowment Needed: $256 263 040

Analysis: Talladega College needs approximately a $256 million endowment for all of its undergraduates to attend debt free annually. Located in a distant shadow of Birmingham approximately 50 miles away the school is well positioned to be far enough away from the big city without being too far away from home for many prospective students. This makes future growth prospects for the college’s population very bright. A population in dire need of growth and needs to triple within the decade to give itself a fighting chance. Unfortunately, in the interim it simply is not graduating enough students and thereby its probability of high quality donors is diminished greatly. However, the students it does have, if they are successful in establishing themselves in Birmingham upon graduation could pay off greatly over the next 30 years as Birmingham is one of America’s fastest growing cities with an extremely healthy banking and medical industry along with an amazingly low cost of living. The college must position its graduates to own the growth that will occur in the coming decades and in doing so Talladega College will reap tremendous rewards. Its present situation is far removed from its historical one. Talladega College  in 1932 boasted the 7th largest HBCU endowment. Just where it stands now has been hard to pin down but safe estimates have it under $10 million. Ultimately, Talladega’s growth potential, geography, and relation to a major growth city give it the potential to become a major factor in the coming generation. If it manages these factors effectively we could see Talladega College once again rise to prominence.

As always it should be noted that endowments provide a myriad of subsidies to the university for everything from scholarship, faculty & administration salaries, research, and much more.

HBCU Money™ Business Book Feature – Language: The Cultural Tool


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A bold and provocative study that presents language not as an innate component of the brain—as most linguists do—but as an essential tool unique to each culture worldwide.

For years, the prevailing opinion among academics has been that language is embedded in our genes, existing as an innate and instinctual part of us. But linguist Daniel Everett argues that, like other tools, language was invented by humans and can be reinvented or lost. He shows how the evolution of different language forms—that is, different grammar—reflects how language is influenced by human societies and experiences, and how it expresses their great variety.

For example, the Amazonian Pirahã put words together in ways that violate our long-held under-standing of how language works, and Pirahã grammar expresses complex ideas very differently than English grammar does. Drawing on the Wari’ language of Brazil, Everett explains that speakers of all languages, in constructing their stories, omit things that all members of the culture understand. In addition, Everett discusses how some cultures can get by without words for numbers or counting, without verbs for “to say” or “to give,” illustrating how the very nature of what’s important in a language is culturally determined.

Combining anthropology, primatology, computer science, philosophy, linguistics, psychology, and his own pioneering—and adventurous—research with the Amazonian Pirahã, and using insights from many different languages and cultures, Everett gives us an unprecedented elucidation of this society-defined nature of language. In doing so, he also gives us a new understanding of how we think and who we are.