Main Line critic of Trump policy awaits hedge fund judgment

Suspended without pay, hedge fund computing wizard David M. Magerman of Merion Station has had to stop talking about his differences with one of his billionaire bosses, Robert Mercer.

Magerman's criticism was over Mercer's role as one of President Trump's top election donors and a patron of Trump political adviser Steve Bannon. The Mercer family is an owner of the Breitbart website, which Bannon used to run.

"They are deciding what my fate is," Magerman said of Mercer and his other bosses at Renaissance Technologies Corp., the Long Island hedge fund firm that Magerman helped build into what Bloomberg LP last year called "the blackest box in all of finance" at one of the most profitable investment firms.

Magerman, a summa cum laude Penn-trained engineer with a Stanford Ph.D., was Renaissance's head trader for 13 years, and a "research scientist" for the last seven.

He was suspended Thursday after the Wall Street Journal's Gregory Zuckerman posted an interview in which Magerman said Mercer's views "show contempt for the social safety net that he doesn't need, but many Americans do," and expressed regret that Mercer "is using the money I helped him make to implement his worldview" that "government should be shrunk down to the size of a pinhead."

Magerman says he expects to know his future with the firm next week. Renaissance wouldn't comment on Magerman's suspension. Presumably the firm's co-CEOs, Mercer and James Simon (who is a Democrat like Magerman, and a big donor like Mercer) are meeting with their advisers to weigh Magerman's comments in light of any policy about  disparaging the firm, principals, or coworkers.

"My beef is not with the company, but with a public figure," Magerman told me. Before his suspension, he told the Journal he put his problem to Mercer conditionally: "If what you're doing is harming the country, then you have to stop."

Magerman left Renaissance and Long Island in 2008 to move his young family to the growing Modern Orthodox Jewish community along Montgomery Avenue in Lower Merion Township, near Philadelphia's' western edge, and quickly took a prominent role in the community.

He set up the Kohelet Foundation (named for the sage in the biblical Book of Ecclesiastes), and the Kohelet Yeshiva High School, and gave millions for Jewish-school scholarships in and beyond Philadelphia.

Two years later Magerman went back to work, remotely, at Renaissance, and the next year he started Six Points Restaurant Group, which has opened and folded a string of kosher restaurants and a catering service. The group now runs the Dairy Cafe and Dairy Express, and plans to reopen the C&R Tavern.  

Politically, Magerman sees himself as a Democrat and a moderate. National leaders “have an obligation to represent all,” not focus on rewarding “single-issue voters,” he told me.

Magerman said he feels an obligation to speak out on public issues, though he acknowledged his former blog and his philanthropies had shown him limits to the educational value of "unfiltered" self-expression.

He feels strongly about improving independent schools. Public and private American "education has gone wrong, it's too expensive, it's not effective," he told me. 

Mercer and Magerman are far from the only hedge fund figures who have taken public stands in politics. Though investment managers who seek public business have been barred since 2010 from collecting fees from states and towns where they support politicians, they remain among the leading donors to national candidates and committees.

Magerman's Lower Merion neighbors include Susquehanna Investments, whose libertarian-oriented founder, Jeff Yass, and senior partners have poured money into past Philadelphia and Pennsylvania races, though their local candidates have a history of losing. 

Last year, senior executives at Franklin Square Capital Management, in South Philadelphia, upset some conservative employees by hosting a private fund-raiser for Democrat Hilary Clinton. Vanguard Group, the Malvern-based mutual fund giant, has had to explain why it gave Clinton's husband, former President Bill Clinton, $400,000 for a pair of speeches to clients back in 2012.

Should firms limit political speech by principals or employee reactions? "My libertarian instincts make me wary of any corporate efforts to impose values or social objectives in the workplace. I'm not even comfortable with arm-twisting to give to the Untied Way," said Andrew Greenberg, partner in Philadelphia-based Fairmount Capital, an investment bank.

"However, Mercer isn't using the company as his megaphone; he's using the money he made from the company, so it seems to me he 's free to say what he thinks," Greenberg added. Similarly, "Magerman is free to say what he thinks about what Mercer thinks."

So "Mercer is ultimately wrong to use his leverage as boss to rein Magerman in," if that's what happens, Greenberg concluded. "If I were throwing a flag I'd throw it at Mercer."