The Investing Legend Giving Away ALL His Money

This is Lee Habib, and this is Our American Stories. And we tell stories about everything here on this show, including your story. Send them to OurAmericanStories.com. They’re some of our favorites. And as you know, we love telling stories about the American dream, and many of those, well, their business stories, because that’s how the American dream is manifested by many Americans who want to own a little business of their own and grow it into something bigger. They are the real heart and soul of America, providing purpose and livelihoods for millions across this great and good country. And today we bring you the story of investing legend Leon Cooperman. Because businesses, well, they need investors and capital to grow, and that is a part of this story, well, that we love to fill in for folks. Here’s our own Joey Cortez with the story of Leon Cooperman.

In 2015, Wall Street legend Leon Cooperman received the Horatio Alger Award, joining the ranks of Rich DeVos, Buzz Aldrin, Hank Aaron, and many more Americans who exemplified great virtue and perseverance. Here’s Leon giving his acceptance speech upon receiving the award.

I’m proud to be joining the Horatio Alger Association of Distinguished Americans. It’s a wonderful honor for me. I’m grateful to become part of an organization whose mission so closely matches what I believe. We live in a country where there are countless opportunities to succeed. We must support young people who recognize the need of a college education. This will benefit the individual scholarship recipients and will help our nation remain competitive in what has become a very small, competitive world. My parents certainly recognized the importance of education. They were Polish immigrants, and their lack of education limited their prospects, but they instilled in me a desire to do well in school, and my education served me well in my financial career. But beyond education, I believe the best thing a young person can do is to pursue something they love. I like to quote Henry Ford, who said, “The best way to make money in business is not to spend too much time thinking about how to make it.” If you love what you’re doing, the money will take care of itself. Hard work has always been an important factor in becoming successful. You know, every morning in Africa, a gazelle wakes up and knows it must run faster than the fastest lion or be killed. And every morning a lion wakes up knowing it must outrun the slowest gazelle or starve to death. The lesson is that no matter whether you’re a lion or a gazelle, when the sun comes up, you’d better be running.

And Leon has been running since his childhood. But one teacher told me I’d never amount to anything. You know, I grew up in the South Bronx with four other guys. We were inseparable. School, the secondary consideration every day after school was, depending on the season, basketball, stickball, football, baseball. I’m the only one still alive. There’s a movie in the sixties called “Fort Apache, The Bronx,” starring Paul Newman. Okay, I grew up in Fort Apache. The opening scene of the movie is, there are two kids on the roof of a six-story tenement building, throwing a third kid off the roof, obviously killing him. I could have been that kid. I wasn’t. You know, I grew up in a rough-and-tumble neighborhood, but I stayed on the straight and narrow. I stayed out of trouble. I had the right values due to my parents, and I was lucky I got out of the ghetto.

Well, I was very industrious, you know. I did a lot of different jobs growing up. I fixed flat tires, which was hard work, you know, because some of these trucks were coming with a flat, big tire you had to deal with. Then I packed fruit in a fruit store. My first serious paying job was an usher at the Loews Paradise Theater in the Bronx, 55 cents an hour. But, you know, I learned the benefit of hard work and getting money and having some degree of independence. My father came to America at the age of 13 as a plumber’s apprentice, had no formal education at all, worked very hard. He actually died carrying a sink up a four-story tenement, even though he was retired. He was doing somebody a favor. He should have been doing it, because he was retired due to a heart condition, and he had a heart attack and died, you know, doing the favor for a friend, installing a sink down here in Florida. But he emphasized the importance of education, and people ask me, “What do I attribute my success to?” I say, “It’s hard work, it’s luck.” It’s a certain amount of luck in life and intuition. So, the most quizzical about the intuition, in part because the hard work and the luck are self-explanatory. “What was the intuition?”

So, back in the sixties, if you finished your major and minor in college in three years, you were allowed to count your first year of dental or medical school. Towards a fourth year of college, you’d get a separate degree. So, in the summer of 1963, I worked very hard to finish off my major. I took physical chemistry at the University of Pennsylvania. That ended my major, and I enrolled in the University of Pennsylvania Dental School. After eight days, everybody laughs about that, but after eight days, I was wondering if I was pushing myself in a direction that I was fully committed to. I had paid the tuition for a year. I took up one of a hundred spaces in the dental class. I paid my room and board for a year, all of which would be lost if I went back to undergraduate school to finish off my fourth year, unencumbered by any decision. I called that intuition. I went to the dean in dental school, who was very tough on me—not unfair. His line: “You know, you deprived the 101st applicant of a dental education,” which was frankly retrospect book, because after eight days, they can call somebody on the waitlist and admit him, which I’m sure they did. I went to the West Bronx, and I went to Hunter College, which is part of the City University of New York. And then I worked as a quality control engineer for Xerox Corporation for about a year, and then I decided to go back to school to get an MBA. Leaving dental school was a very big thing. You know, you have to keep in mind: I lost the tuition for a year. I lost my room and board for a year. All my friends knew I was off at dental school. My father was walking around saying, “My son, the dentist!” I pissed him off, but good, when I went back. He didn’t know what I was in store for, so he looked at that as not a favorable light. So, I’d say leaving dental school was a big decision, and the most important in my life was joining Goldman Sachs.

And you’re listening to Leon Cooperman tell the story of his upbringing in the South Bronx. Watch that movie with Paul Newman, and you won’t believe what the South Bronx looked like back then. It doesn’t look like it anymore. It may have been the toughest patch of real estate in America. And when we come back, we’re going to hear more about this remarkable son of an immigrant story—Polish immigrants, so many millions here in this country. When we return here on Our American Stories. Folks, if you love the great American stories we tell and love America like we do, we’re asking you to become a part of the Our American Stories family. If you agree that America is a good and great country, please make a donation. A monthly gift of $17.76 is fast becoming a favorite option for supporters. Go to OurAmericanStories.com now and go to the donate button and help us keep the great American stories coming. That’s OurAmericanStories.com.

And we continue with Leon Cooperman’s story here on Our American Stories. When we last left off, he ditched dental school, and then, well, let’s just say, the break of his life. He got a job at Goldman Sachs. Let’s return to more of Leon’s story.

My career at Goldman, I hired as a junior analyst, became a senior analyst very quickly, and then in 1982, I took on all the portfolio strategy work at the firm. 1972 to 1982. I had a very, very good career at Goldman, and for many years, I was advocating to Goldman that they should go into the money management business. And for many years, it shows you how little influence I had. They said, “Lee, you don’t get it.” We’re of the view that brokers should do brokerage, money managers should do money management. Don’t compete with your customer. Goldman’s traditional customer base was institutional investors. And I said, “Open up your eyes and smell the roses!” Merrill Lynch has Merrill Lynch Asset Management. Kidder Peabody has Webster Asset Management. CSFB has CSFB Asset Management. You know, everybody’s in the business, and your clients will accept the fact that you’re in the money management business as long as you compete on a level playing field. And they wouldn’t do it.

And then all of a sudden, one day, Salomon Brothers, the firm’s arch-trading rival, announced that Bob Salomon Jr., who was a friend of mine, was leaving the research department. He was in the same position that I was. He was the partner in charge of research. To start Salomon Brothers Asset Management. And Steve Friedman and Bob Rubin at the time, who were the co-heads of the firm, came to me and said, “You know, we made a mistake. We should have listened to you. Would you leave research and build us an asset management business?” So I became the CEO of Goldman Sachs Asset Management, and I wanted to start a hedge fund as part of the asset management business. And they were reluctant to do it, and they said no. And so I decided, and I really wanted to invest some money differently. I didn’t want to manage other people’s money. I wanted to manage my own money. So, when they turned down the ability to have a hedge fund, I decided to retire to start my own hedge fund. And that was a very difficult decision, because at that time, I was like the fifth-highest percentage partner of the firm, fairly senior. The firm was earning a couple billion dollars a year, so I was making a lot of money. And you don’t leave a job where you’re making that kind of money for a startup venture very easily. And I was happy at Goldman. But that was a big decision. It turned out to be a good decision because my first year, it was up 25%, and the second year, it was up 70%.

And then Goldman called me up at the absolute worst time, 1993, after I was up 70% and probably made more money collectively than the entire Management Committee of Goldman Sachs. In the aggregate, they came to me wanting to get into the hedge fund business. They said, “We made a mistake not going into the hedge fund business. Would you help us build the hedge fund practice?” And I laughed and I said, “Sure,” but I say that with a big smile on my face. Goldman’s a great firm, a big success. You know, I just made a partner. I mentioned before, they earned $40 million. I think today they probably earn 15 to 20 billion, maybe more.

By 2018, Leon’s hedge fund, Omega Advisors, managed roughly $3.6 billion. That same year, Leon decided he wanted to focus on his charitable investments, so he turned his company into a family office to manage his own investments and charitable giving. And now Mr. Cooperman, worth over $3.2 billion, is invested in giving it all away.

You know, I’ve lived the American dream. You know, I started with nothing, made a lot of money through hard work, luck, and intuition. And I’ve taken the Giving Pledge with Warren Buffett, and I’m also taking a Giving Pledge with Mike Leven, who has a comparable deal, but it’s in the Jewish world. So I’m committed to giving away all my money. Basically, not half, but all my money. I discovered a long time ago there are only four things you could do with money. When you think about it, the first thing you could do with money is you can pleasure yourself. You could buy airplanes, art, homes, baseball teams, football teams, basketball teams. I never really had an interest in that. The second thing you do with money is you can give it to your children. But I think if you have a lot of money, giving all your money to your kids is a mistake, but you could deprive them of any ability to self-achieve. So I’ve given my kids a rational sum of money, but didn’t take away from them the incentive to work and achieve on their own. Plus, I didn’t give my kids money until they were successful on their own. The third thing you could do with money is give it to the government. But only a fool gives the government money. You don’t have to give them. You pay your taxes as a citizen, but you don’t write them a check saying, “Here’s an extra $100,000 or something like that.” And the fourth thing you can do with money is recycle it back into society, try to make the world a better place. And that’s the bulk of my activities. I have a very large foundation which I set up probably 35 years ago, and I put excess money into it, and I give away, I would say—not bragging—but maybe $25-$30 million a year to charities.

My biggest charity that I’m most interested in is something called the Cooperman College Scholars, where I had an idea that I wanted to put some money aside to pay college tuition for qualified youngsters in Essex County, New Jersey, that needed financial support. It’s largely of color. We have about 500 kids that I’m paying the college tuition for. The deal was you’ve got to show initiative. Number one, enroll in a free, three-week pre-college program designed by Franklin & Marshall. It basically tells you what to expect when you go to college. It prepares you so you have it. It’s a free deal. So unless you enroll in that and show the initiative, you do not qualify for my program. Second, you have to be academically qualified. I’m very big on equal opportunity, not equal outcome. I want to teach people how to fish. I don’t want to give them fish. And I have a board of 15 people that interview these kids and determine whether they’re qualified for the program or not. Third, you have to have a financial need. I’m met by government. In fourth, you have to live in Essex County, New Jersey, which is where the program is based. And I originally put $25 million into that program. Fighting the odds. And the odds are not particularly favorable. Thirty-five percent of Essex County kids—Newark kids—went to college. Only 5% matriculate and graduate. And I told the people that I gave the money to that I’m not paying this kind of money for a 5% graduation rate. You show me a superior graduation rate, and I’ll basically add to the money. And the first cohort just graduated. With five years into the program… We have a 75% graduation rate in four years, and will have a higher rate in six years. And so I gave them another $25 million. I have $50 million I set aside to provide, and it gives my family and me a great deal of pleasure.

Having lived a long, successful, and charitable life, here’s how Leon hopes to be remembered.

My kids come home. You know, I was very successful. I’m very lucky, but I maintained my sense of values. You know, I have a 2002 automobile. I have two Hondas. People in this community drive around with Teslas and Bentleys, and Rolls-Royces, and I’d rather give away the money to people that need it, rather. It’s been a lot of amenities, so I think I have the right set of values. I was a good friend, and I treated people properly. Aside from giving away all his wealth, Leon’s legacy will live on through his grandchildren—a legacy that brings tears to his eyes.

23, 20, and 11. The 11-year-old is, you know, it’s too early to tell how he turns out. The 23-year-old is exceptional, very charitable, very concerned about others. I quote her. She basically posed some questions, and I’ll give it to you. She says: “If I’m not for myself, then who will be for me? If I’m not for others, then what am I? And if not now, when?” says Rabbi Hillel. She answers, “If you’re not for others, no one will be for you. If you are for others, then others will be for you. You will show others how to be more than only themselves. They will therefore be for you. The time is always now.” It’s now or never. Sorry for being a little sentimental. It’s my granddaughter, Courtney. The greatest pleasure I get now is seeing my kids and my grandchildren grow up purposefully and in good health. And that’s not the voice one would expect of an investing legend, but it’s quite common and ordinary, actually. The story of a great investor, the son of immigrants—a Polish immigrant, a hard-working dad, a plumber—the story of Leon Cooperman. Here on Our American Stories.