Dan Och’s Fortune Soars With Family Office After Hedge Fund Exit
Dan Och’s Fortune Soars With Family Office After Hedge Fund Exit
(Bloomberg) -- The best thing to happen to Dan Och, financially speaking, may have been leaving the hedge-fund firm he founded more than two decades ago.
When he exited in 2019, his Och-Ziff Capital Management had already seen more than $20 billion of outflows after becoming embroiled in a foreign bribery scandal. Its shares were down about 90% from its IPO price and regulators had made it difficult for the firm to raise money.
Yet in the years since Och gave up the title of chief executive officer and pulled most of his money from his namesake company, his net worth has climbed to $4.5 billion from an estimated $3 billion, according to the Bloomberg Billionaires Index. That doesn’t include more than $600 million now housed in his family foundation.
Och’s lucrative second act has been made possible by his family office, Willoughby Capital.
Unshackled from managing other people’s money, Och, 60, has embraced the hottest investments of the current era, using the most fashionable billionaire accessory, blank-check companies, to turbocharge his fortune. He owns a stake in Cazoo Group Ltd. and has invested in crypto exchange Coinbase Global Inc. and Stripe, one of the world’s most valuable startups. Willoughby has participated in at least a dozen funding rounds this year, according to data compiled by Bloomberg.
“Dan was obviously a super successful hedge fund manager, but a hedge fund manager has constraints to what they invest in,” said Brian Gaister, head of multifamily office Pennington Partners. “With his family office, he has the flexibility to invest in different industries and in private and public companies.”
Willoughby Capital
Och set up New York-based Willoughby in 2009, soon after Och-Ziff went public. It hired former ACI Capital Vice-President Mira Muhtadie as chief investment officer four years later, but most of the expansion occurred after Och left his namesake alternative-investment firm, now renamed Sculptor Capital Management.
Willoughby has offices in Connecticut, New Hampshire and Florida, where Och relocated from New York in 2019, partly to save on taxes. Just after he moved, Och bought a pied-a-terre at 220 Central Park South for $95 million.
The firm, which doesn’t publicly disclose its investments or the funds at its disposal, has 10 investment professionals -- including Och -- overseeing holdings mainly focused on software, financial technology and consumer sectors, said a spokesman for the U.S. billionaire.
These include Adnan Ahmad, who joined from Roystone Capital in mid-2019 to lead its direct public and private activities, and John Walton, a former vice-president at CIM Group, who oversees real estate deals. Other recruits recently have come from banks and hedge funds including Morgan Stanley and Anchorage Capital Group.
In addition to Och’s personal assets, Willoughby also helps to manage investments for the Jane and Daniel Och Family foundation, which according to its latest tax filing had assets in 2019 of more than $350 million. Holdings include stakes in venture capital, private equity, and hedge funds including those from Sculptor. Recipients of its donations that year included the U.S. Holocaust Memorial Museum, the Miami Beach Police Foundation and the Breast Cancer Research Foundation. Och’s spokesman said assets have since risen significantly.
Goldman Trader
A New Jersey native, Och studied finance at Wharton School of the University of Pennsylvania before starting as a risk arbitrage trader at Goldman Sachs Group Inc. in 1982. He worked in a department led by future Treasury Secretary Robert Rubin and rose to become co-head of U.S. equity trading before he left to start his own firm in 1994 with $100 million from the Ziff family, whose fortune came from a publishing empire.
One proviso was he couldn’t raise outside funding for five years. When that ended, Och started seeking new investors and by 2002 his firm had $5.8 billion under management for its multistrategy funds, which speculated on everything from stocks to mergers and bankruptcies.
Och-Ziff became one of the first publicly traded hedge-fund businesses in 2007 amid booming interest in alternative managers. By 2015, its master fund was known as one of the industry’s most profitable, while overall assets under management had grown to almost $50 billion.
“He has a huge desire to win,” Daniel Stern, a Ziff Brothers Investments co-founder who helped Och start his hedge fund, told Bloomberg for a 2010 profile on the U.S. billionaire. “All the time.”
That ascent stalled when an Och-Ziff unit pleaded guilty in 2016 to a conspiracy charge as part of a settlement of the U.S. government’s long-running probe into bribes to gain business in Africa.
The firm subsequently paid a $213 million criminal fine to the U.S. Justice Department as well as $199 million to the Securities and Exchange Commission to settle civil claims. Och, who regulators said was unaware of the bribes, also paid a personal fine of about $2.2 million.
“This has been a deeply disappointing episode,” Och said in a September 2016 statement. “This conduct is inconsistent with our core values and not representative of our hundreds of employees.”
Shares of Sculptor -- where Och remains a major investor -- have been on a wild ride. While they’re up 32% this year through Thursday, they’ve tumbled almost 68% since the start of 2016 and 94% since the IPO.
That slide put a dent in Och’s fortune, but Willoughby’s performance has more than helped make up for the slump.
His family office invested in Coinbase before 2019, giving it returns of more than 500% if it hasn’t sold its stake. Willoughby bet on Stripe before the payments firm’s valuation almost tripled to $95 billion in March, and it’s already gained at least 200% on a stake it bought last year in customer-service software provider Talkdesk, according to data compiled by Bloomberg. This year, Willoughby has invested in cryptocurrency-exchange operator FTX Trading, India’s e-commerce giant Flipkart and ID.me.
Och has also taken advantage of the boom in special purpose acquisition companies, or SPACs, to reshape his fortune.
He set up Ajax I with Glenn Fuhrman, a fellow Goldman alumni and co-founder of Michael Dell’s family office, and helped to lead its initial public offering in October 2020 ahead of its merger with London-based Cazoo. Och’s stake in Cazoo, roughly $150 million, rivals the size of his Sculptor holding. Willoughby has invested in at least three other SPACs including Thimble Point Acquisition Corp., which finalized a deal with health-care firm Pear Therapeutics Inc. this month.
“They don’t need to sell to give returns back to investors,” said Paul Westall, co-founder of family office recruitment and resourcing firm Agreus Group. “They’re doing this just for themselves, so they often hold on to their investments for a lot longer.”
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