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Tom Steyer. Photo: Steve Pope/Getty Images

Tom Steyer, who launched his presidential campaign on Tuesday, was early to the hedge fund game.

The state of play: In general, there are two ways to become a billionaire hedge-fund manager. The first is to be a pirate — raid the Bank of England, bet on a housing collapse, that kind of thing. The returns on those bets can be so enormous, you can make billions even off a relatively small asset base.

Quick take: Steyer founded Farallon Capital in 1986, and excelled on three main fronts:

  1. A protégé of Bob Rubin's at Goldman Sachs, Steyer was an expert at risk-adjusting potential returns. He's one of the few hedge fund managers who actually spent most of his time constructing sophisticated hedges, making sure he got the returns he wanted without taking risks he didn't want to take and without using undue leverage.
  2. As one of the earliest proponents of "absolute return" investing, Steyer had a bond investor's terror of losses. Return of capital was always more important than return on capital. That made him very attractive to conservative institutional investors.
  3. Hailing from New York's Upper East Side, Steyer had all the elite connections he needed to be successful: His father was a partner at Sullivan & Cromwell, and his resumé segued seamlessly from the Buckley School through Exeter, Yale (summa cum laude and Phi Beta Kappa), Stanford Business School and Goldman Sachs. He also married into money: His wife, Kat Taylor, is the granddaughter of a San Francisco banking magnate.

Between the lines: Steyer was the kind of hedge-fund billionaire who was quieter, and didn't make big audacious bets. But he was able to promise conservative institutional investors predictably good returns, in both bull and bear markets. That helped him amass a huge asset base.

  • Good returns on $30 billion of assets will ultimately make you just as rich as spectacular returns on $3 billion of assets.

The impact: Steyer left Farallon Capital at the end of 2012, and one of his greatest successes is that it's still a Top-20 hedge fund 7 years later. Steyer wasn't some lightning-in-a-bottle individual genius. Rather, he managed to build an institution that would outlast him.

Editor's note: Tom Steyer left Farallon at the end of 2012, not 2013, as was previously written.

Go deeper

Former Georgetown tennis coach pleads guilty to accepting admissions bribes

Gordon Ernst (left) former head tennis coach at Georgetown, is pictured outside the John Joseph Moakley United State Courthouse in Boston on March 25, 2019. Photo: Jessica Rinaldi/The Boston Globe via Getty Images

A former Georgetown University head tennis coach has pleaded guilty Tuesday to bribery charges related to facilitating the admission of prospective applicants.

Why it matters: Gordon Ernst solicited and accepted bribes from William Singer, ringleader of the cheating scheme uncovered by Operation Varsity Blues, and families in exchange for helping prospective applicants get into Georgetown as student athletes, according to the Justice Department.

3 hours ago - Health

CDC says some immunocompromised people can get fourth COVID shot

Photo: Noriko Hayashi/Bloomberg via Getty Images

The Centers for Disease Control and Prevention said in updated guidelines Tuesday that some immunocompromised people who have received either Pfizer or Moderna's COVID-19 vaccines will be able to get a fourth shot.

Details: People over 18 who are "moderately to severely immunocompromised" and have received three doses of an mRNA vaccine may get a fourth shot (of either the Pfizer, Moderna, or Johnson & Johnson vaccines) at least six months after getting their third Pfizer or Moderna dose, per the CDC.

4 hours ago - Politics & Policy

Scoop: Biden plan expected to include at least $500B for climate

Photo: Stephanie Keith/Bloomberg via Getty Images

The White House is privately telling lawmakers the climate portion of President Biden's roughly $2 trillion social spending plan is "mostly settled" and will likely cost more than $500 billion, two sources familiar with the talks tell Axios.

Why it matters: A price tag of $500 billion to $555 billion is a huge number and, if it holds, would likely be the single biggest component of the sweeping package. It also isn't far off from the roughly $600 billion proposed when the bill was expected to cost $3.5 trillion.