Three separate funds managed by university students have each received $100,000 in donations from billionaire hedge fund manager Steve Cohen. The gifts from the New York Mets owner were given to help college students develop real-world experience managing diverse investment strategies.
Brown University’s student-run Brown Investment Group received Cohen’s donation to establish a long/short fund that went public in March, as first reported yesterday (Nov. 6) by the Brown Daily Herald. Brass Rat Investments and Berkeley Investment Group also received donations from Cohen this summer. Though the two groups are respectively run by students at the Massachusetts Institute of Technology and the University of California, Berkeley, the funds aren’t affiliated with their universities and are structured as charitable entities.
Cohen has a storied history in investment funds. Cohen’s hedge fund S.A.C. Capital Advisors shut down in 2013 after pleading guilty to insider trading and paying $1.8 billion in fines. He has since founded the firm Point72 Asset Management and currently has an estimated net worth of $19.8 billion, according to Forbes, which ranked Cohen among the wealthiest hedge fund managers of 2023.
Why is Cohen endowing student-run hedge funds?
The idea of supporting student-managed funds came about as the Covid-19 pandemic brought new and young investors into the market, according to Jean Horenstein of Point72 Academy, the firm’s investment analyst training program. “Steve wanted to provide opportunities for students to do research to support their ideas,” she told Observer.
The donations came from Cohen personally, although Horenstein, who volunteers as an advisory board member for the Brown Investment Group’s fund, led the process of identifying the participating investment groups.
The billionaire was primarily interested in providing seed funding to establish long/short funds, investment funds that take a mixture of long and short positions in stocks or other securities. “He noticed that the majority of the student investment funds are long-only, and he wanted to provide students with early exposure to what it’s like to run a long/short investment strategy and learn about the diversity of ideas,” said Horenstein. The three funds were chosen due to factors like their longevity, depth of curriculum, and student and faculty support, she said, with Cohen requiring that the funds donate a portion of their investment proceeds to a nonprofit.
Cohen’s many charitable gifts
This is the first time Cohen has donated to student-run investment groups. He’s previously supported university students through major donations. In 2009, Cohen and his wife, Alexandra, gave $30 million to Brown for undergraduate financial aid. Between 2016 and 2020, the couple loaned the school a large blue bear sculpture by Urs Fischer from their art collection. Cohen has given millions to schools like New York University, the University of Southern California and Columbia University.
The hedge fund manager’s philanthropic interests are wide and varied. Earlier this year, the Steven and Alexandra Cohen Foundation gave $5 million to the nonprofit Multidisciplinary Association for Psychedelic Studies to support its research into medical uses of MDMA. Besides psychedelics, Cohen’s family foundation has funneled more than $1 billion in donations over the past two decades to nonprofits focused on underserved communities, children’s health, veterans and the arts.