Category Archives: Editorial

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.

HBCU Money™ Turns One Year Old

By William A. Foster, IV

“I am not afraid of tomorrow, for I have seen yesterday and I love today. ” — William Allen Whit

To start a financial journalism company is no light-hearted task. Yet, one year ago today after much preparation that is exactly what was done by AK, Inc, the investment and operations firm that wholly-owns HBCU Money™. It has been an amazing year full of accomplishments, long nights, and revelations. HBCU Money’s biggest success over the past year I believe was expanding our coverage into the country of Ghana. We are and will continue to be focused on financial journalism from an African Diaspora point of view. It is the culture and purpose for which we were founded. Many say that there is a distrust from the African American and Diaspora community towards the world of economics, finance, and investment. I believe there is just lack of information from a point of view that says not only do we operate in the financial world but there is much to be done, to be built, and it is vital to our Diaspora’s infrastructure that we do so. There is much more to be done at HBCU Money™ and I expect year two will be an even bigger year than our first as we find our proper footing and place within the world of HBCU owned media. Again, I want to say thank you to all who have supported us because there are too many to name. Check out some of the highlights from our first 365 days in business.

  • If every person who reached the top of Mt. Everest viewed this site, it would have taken 13 years to get that many views.
  • The busiest day of the year was November 28th. The most popular article that day was 2011’s Top 10 HBCU Endowments.
  • There were visitors from 75 countries in all! Most visitors came from The United States. Canada & The United Kingdom were not far behind.

It has been a honor to serve as Editor-In-Chief of HBCU Money™ this past year and look forward continuing to do so. There is no time to rest. Enjoy the moment. Now let us get back to work because as our motto states “Our Money Matters”.

President Obama Mural At HBCU Business In Houston Defamed – AGAIN

By William A. Foster, IV

The power of the white world is threatened whenever a black man refuses to accept the white world’s definitions. – James Baldwin

obamapaint

There is something to be said for African Americans. We are some of the most forgiving and oft as Dr. John Henrik Clarke said naive – socially and politically – of the rationale behind the behavior of other groups in their interaction with us. Our desire for acceptance (see assimilation) into the mainstream of America society sometimes makes us accept behavior from others that pushses against our own economic, political, and in this case social interest.

After picking up a friend last night, I headed towards home and we passed one of Houston’s most respected and renowned eateries, The Breakfast Klub. Located in Midtown, an area of Houston which was gentrified and was formerly a combination of the city’s Third and Fourth Wards. That in and of itself could require an entire article to be written but I digress. I glanced over and noticed the mural of President Obama, commissioned by the restaurant’s owners Marcus and Melvinie Davis, to show their immense respect and support for the president had been annihilated with swaths of paint. Mr. and Mrs. Davis are an HBCU family and Mr. Davis proudly and oftly shows his support for his alma mater Texas Southern University for which he also serves as the alumni association’s president.

The mural as I recall was originally put up about four years ago during the now president’s time as a candidate. Even then I recall it being vandalized on numerous occasions with one particular incident involving what appeared to be red paint balls shot toward President Obama’s head in the mural. These acts are brazen to say the least as the owners’ went so far to implement security cameras around it. To say that President Obama has been polarizing and an uncomfortable presidency for America would be an understatement. The image of a powerful African American family has even been polarizing for many and responses to such have ranged from outright threatening to veil undertones of menace. Vandalizing a mural is more than just saying you do not like the president. You can do that on blogs, television shows, twitter, and even in an article. I have even been firmly against some of the president’s policies as they relate to African American development and overall economics. However, I show the office of the president respect whomever is in it, which we know is not a simple or easy job and I show an African American man who is a husband, father, and striving for an ambition beyond himself respect. Something some of our combatants do not seem to want to do. Many in the African American community were not fans of the Bush family. However, you never saw effigies burned in our community towards any of the men holding the office of president no matter how much we disliked them.

Maybe it is our fault that these things continue to happen because there is no consequence to the harming of anything we possess and hold dear when stamped and trampled on by others – not even our very lives. We are always ready to forgive. We are always ready to march. We are never ready to act in self-defense or even take an offensive to show we are not doormats. If anything were to happen to an images or statues of Washington, Reagan, even dare I say Clinton – there would be a call to arms about the sanctity of respecting the institution of the presidency of the United States. Yet, we concede to disrespectful behavior after a few cries and whimpers about not being treated fairly.

This morning after taking another drive past the mural it appears that the owners’ have either decided they have had enough or that they will repaint it better and bolder. It is yet to be determined as they have painted over the entire mural in white paint and in doing so erasing the vandalism and the President’s picture. There is much irony in that prior sentence when one examines it. In the end, I believe they should have left it up for awhile. To send a reminder to African America that if you believe we have arrived because there is an African American president you truly do not understand the war you are beholden in. We have turned both cheeks and even dropped our trousers and had those slapped. Our institutions come under fire and asked if they are relevant. Our citizens from babies sleep in Detroit to men the night before their wedding day in New York day shot down by police and “police” citizens. Our social fabric attacked at every waking and sleeping moment by others.  Will we ever respond or continue to cower our social interest again and again and again for the sake of “peace” and “unity” while our humanity is disrespected and trampled upon?

Minority Illusion: The African America-Asian America Gap

By William A. Foster, IV

It is natural to man to indulge in the illusion of hope. We are apt to shut our eyes against a painful truth, till she transforms us into beasts. – Patrick Henry

There is a reality that European Americans seem to be aware of and African Americans seems virtually clueless to. America is fast shifting from an European Diaspora controlled country to an Asian Diaspora controlled country. The social and economic crisis in Europe has lowered European immigration and economic resources flowing to the US. This reality coupled with a rapidly declining birthrate of those of European descent in the US has left an opening for a new power to arise. Asia has seen the opening led by China and seems intent on completing a mission Japan attempted with Pearl Harbor. To not only retrench European aggression toward Asia but to have it aborted all together by creating a cold war fought primarily on US soil and limit another resource invasion of the Asian continent.  The term “minority”, an European American construct, which lumps all people who are of non-European descent into the same boat as if their social, economic, and political capital are the same is both dangerous and naive for African American strategy. Somehow it appears we have become so fixated on European Americans that we are completely missing the rise of Asian America. Let us examine a few of the statistics.

Life Expectancy: Asian America – 87.3 Years* l African America – 73.6 Years

% of 25 and older with degrees: Asian America – 50%* l African America – 18%

Median Income: Asian America – $68,780* l African America – $32,068

Median Net Worth: Asian America – $83, 500** l African America – $2,170

Unemployment Rate: Asian America – 4.8%* l African America – 13.4%

Participation Rate: Asian America – 63.7% l African America – 61.7%

*Leads all ancestral groups in U.S.

** Asian America’s median net worth was actually higher than European America’s prior to the 2008 recession.

The graph below, showing Asians as the fastest growing demographic in America not Latinos, coupled with the aforementioned social and economic numbers will have vital future political implications. It is no secret that the more educated and affluent a population is the more civic and politically engaged they are. The chart is showing that not only will they have the education and money but they will have the raw votes in the coming decades to become the new majority with unbridled power and reduce European Americans to the largest minority group in America. One has to assume while some European Americans feels some level of responsibility to African Americans historically speaking – Asians Americans have no such baggage. This leaves one to wonder as Asian Americans assume power where that will leave African America in the power vacuum.

Asian Nation, a journalism site that focuses on Asian America reviewed the top colleges and universities for Asian Americans also took some student interviews. One very interesting quote from an Asian student attending Pomona College in Claremont, CA was “The issue of ‘integration’ is a loaded one in that many white students and staff often accuse students of color, specifically Asian American students, of being anti-integrationist because we feel the need to be politicized and develop leadership within our own community.” Whereas African Americans are obsessed with integration and diversity this suggest Asians plan to secure their strength from inward first and foremost. Ironically, this was the strategy originally of African America coming out of slavery but would fall by the wayside as the civil rights generation would pursue a fruitless strategy of desegregation virtually wiping out all of African America’s institutional strength.

From a geostrategic point of view between the Asian and African Diasporas influence in America one only need to look at the ownership of U.S. debt held by foreign countries. The two largest holders are China and Japan while ten of the top thirty-seven largest foreign holders are Asian countries in the latest Treasury report. There is $5.430 trillion of U.S. debt held by foreign countries and of that 53.7 percent is held by Asian countries while only 0.2 percent is held by South Africa, the lone African country present in the top thirty-seven holders in the report. It becomes clearer and clearer who is establishing influence and control from within and from the outside in America.

African America too often falls into the lull that all “minority” groups are in the same position as we are or want to simply settle for inclusion as we seem to want. As Chinatowns and other Asian enclaves pop up, African Americans continue to abandon our own communities in droves for “better” communities which we tend to deem any community other than our own. When we examine most African American neighborhoods and communities it is Asians and Arabs finding their economic footing by owning the majority of small businesses within our borders while Europeans still control virtually all of the financial outlets via banks or payday loan businesses. It would seem that everyone recognizes the value in our community but us. We continue to search for allies everywhere but from within and have put all of our chips on the illusion of inclusion instead of the reality of control and competition for resources. We are the group with the least but willing to share the most. In the end this lack of awareness about the rise of Asian America will leave African America with the same reality (actually worse) we faced in the early twentieth century when we contemplated putting our loyalty behind Russia  to liberate ourselves from the oppression of America. As it turned out as famously quoted by Dr. John H. Clarke, “We were not in a battle between a liberator and oppressor but between two oppressors with different methods of oppression. In the end Russia no more wanted us to be free any more than U.S. but they wanted us under their control.” The lion must awake because the fire of the dragon appears to be just warming up.

50 Years Later: The Failure At Ole Miss

“Help your pieces so they can help you.” – Paul Morphy

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This past Monday was the 50th anniversary of James Meredith’s forced entry into Ole Miss. A university that in the past symbolically was the pride of the south’s European American institutional power and today still remains something of an enigma of that symbolism. The entry of James Meredith into Ole Miss would would be a complex matter that would have then Governor Ross Barnett giving fiery speeches in public and in private trying to work out a deal with President John F. Kennedy to save face.  Ultimately, the entrance of Mr. Meredith would end in bloody riots as mobs descended on the campus from all across the south and require 20,000 U.S. troops to restore order.

Many of the Civil Rights Movement generation look back at this as a shining moment of overcoming the “evils” of segregation. Unfortunately, it is one of many moments where the purpose of what should have been fought for was put at the back burner for facade changes not institutional ones. One could argue had we spent more time fighting for reallocation of resources so that schools like Alcorn State, Jackson State, and Mississippi Valley State actually had equal resources to their counterparts at Ole Miss the impact on today’s African America in Mississippi would have been profoundly greater. Instead, we used all of that energy to ensure the admittance of one man into a hostile environment for which we controlled none of the social, economic, or political capital of the institution and still do not to this day. If one could find one category where the African American community’s institutional power position has improved since James Meredith’s entrance I would wholeheartedly love to see it.

A look at the cold hard numbers show us not a story of progress but regression for African Americans in Mississippi. The median household income of African-Americans in the state in 2006 was $21,969 or just 51 percent that of European-American households ($43,139), this according to the Center for Policy Research and Planning in Mississippi. The median income for African Americans nationally is $34,218 and for European Americans nationally it is $55,530. This means that European-American Mississippians are making 77 percent  of their group’s national median while African-American Mississippians are making approximately 65 percent. The CPRP reports “And trends are not promising, based on the most recent data available: the gap between the earnings of whites and blacks in the state widened over the 1999-2006 period. Nationally, the gap remained the same.” Keep in mind the median income level for the poverty level is $23,050. Examining the combined endowments for Ole Miss, Mississippi State, and Southern Mississippi according to NACUBO equal approximately $876 million meanwhile the combined endowments from US News and NACUBO for Alcorn State, Jackson State, and Mississippi Valley State stand at approximately $23 million or 38 times less. This is just the economic numbers.

The state of Mississippi has one board that oversees all eight of its four year public universities of which there are three African American universities or HBCUs. The board has one HBCU graduate out of thirteen. In the state senate of fifty three members there are only seven HBCU graduates. On the surface that sounds like an amazing representation until you realize that almost 40 percent of Mississippi’s population is African American while the seven out of fifty three represents a 13 percent representation in the political sphere. I could touch on the social state of African Americans in Mississippi but this might turn into a book at that rate, but as we see with the economic and political power or lack thereof it is not hard to assume the social state.

There was a fight to be fought during the Civil Rights Movement absolutely. It is pretty clear however we failed at what the goal of that fight should have been. We went for the as Malcolm so eloquently put “sitting on the toilet next to white folks” goal instead of the institutional fight. To this day I am not sure why we thought the abandonment of our institutions was a sensible endgame. Mr. Meredith did not get to bring any professors that looked like him to Ole Miss and one would be foolish to assume the Ole Miss ruling party is any more inclined to share its spoils with the African American community today than it was when Mr. Meredith first showed up at their doors. One can analyze by the trend in the numbers that things are worse in Mississippi for African Americans than the overall state of African America. So it is not hard to presume that if the overall wealth of African America is $0.02 for every $1.00 European America has overall then that number is even lower in Mississippi. That in itself is a frightful prospect that might give me nightmares tonight.

I respect the elder Meredith as a fighter and all who partook in the Civil Rights Movement. Unfortunately, I find that most of what they fought for has made us more reliant on other communities and less independent than our forebears of Rosewood and Black Wall Street in Tulsa. While all other groups have embraced building higher education institutions that they socially, economically, and politically control for the benefit of their communities – Brandeis for the European Jews, Notre Dame for the European Catholics, BYU for the European Mormons, 36 Native American colleges, and the Hispanic Association of Colleges & Universities – we as African American continue an endless debate of are HBCUs even necessary and should we be making ourselves “less” HBCU. HBCUs only comprise 2.5 percent of all colleges and universities in this country. There has never been a study of just how many colleges of the over 4 000 that exist remain 95 percent and above European American. Yet, the very few we control we are willing to give up for the sake of some illusion of inclusion. You can not give up all your chess pieces to your opponent and expect to win the game. Assuming of course you know you are playing.