Hedge funds that take from the rich and give to the poor

THE idea behind one of the most innovative and ­influential philanthropic organisations of our time sprang from one of the more boneheaded macroeconomic calls ever made on Wall Street. Or as hedge fund ­maestro Paul Tudor Jones tells it: “The biggest error I’ve ever made had the best possible outcome.”

The story begins in the summer of 1987. Stock prices were soaring, but so, too, were interest rates. Jones, then 32 and having made buckets of money during the go-go 1980s, was getting nervous. That September he told his investors that the stock market reminded him of 1929 and a crash was inevitable.

Even after October’s brutal 23% one-day drop, Jones remained apocalyptic. He called up fellow hedge fund manager Glenn Dubin and pleaded: “It’s happening. We’re going into a great depression. We’ve got to do something about it. I want to start a foundation to help, and I’d like you to be involved.”

Of course, Jones was dead wrong about a depression, but that hasn’t mattered. He’s gone on to become a Wall Street titan, with some $14.7bn (£8.3bn 7.8?, E11.9bn) under management. More to the point, his brainchild, a charity called Robin Hood – which was born out of the direst predictions – has become a paragon, forging a new model for philanthropy and attracting heaps of cash from an enviable roster of high-profile benefactors.

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