Alex Porter, Hedge Fund Founder From A.W. Jones Era, Dies at 75Laurence Arnold
A. Alex Porter, who applied the lessons he learned at the first hedge fund, A.W. Jones & Co., as a founder of what today is Amici Capital LLC, has died. He was 75.
He died on April 18 at his farm in Davidson, North Carolina, according to his niece, Elizabeth Boehmler. The cause was colon cancer.
The New York-based firm that Porter founded in 1976 as Porter Management Inc. became Porter Orlin LLC in 2005 and Amici Capital last year. It has about 27 employees and $2.2 billion in assets under management.
As one of “the last practitioners from the A.W. Jones era,” Porter carried the long-ago notion of a “hedged” fund as one that is “long and short and thereby inured to the vicissitudes of the overall market,” said James Grant, a friend and colleague who publishes Grant’s Interest Rate Observer.
Today, by contrast, the term “hedge” suggests “leveraged and long” investing, he said, which often amplifies rather than cushions market swings.
“Alex’s professional story is the story of the evolution of Wall Street,” Grant said yesterday in a telephone interview. “He got into the business when the hedge fund was really still the intellectual property of Alfred Winslow Jones himself, and he imbibed all of the ideas and the culture of that firm, which included deepest, darkest secrecy and discretion.”
Porter’s hedging strategy included being short -- or betting on the decline of -- shares in companies “where financial legerdemain denotes something is seriously wrong,” Kathryn F. Staley wrote in “The Art of Short Selling” (1996).
Those companies, Staley wrote, are “where management does not own much stock, where management is not realistic and forthright about their business, and where the company itself is leveraged or has a fatal balance-sheet flaw.”
Porter’s first fund, Amici, generated a net compound annual return of about 20 percent from its formation in 1976 until 1993, according to the firm. Paul Orlin took over management of the firm’s portfolio in 1994.
“Describing Alex as a man of humility does not really do justice to his grace and selflessness,” Orlin, the firm’s chief investment officer, wrote in a note to investors. “Alex cared. He cared about his colleagues, our investors, and I know he felt fortunate to call many of them his friends. Anyone would be hard pressed to find another in the hedge fund business with such an extraordinary record of success and such an insatiable desire to make those around him successful.”
Grant, in a death notice published in the Charlotte Observer, wrote:
“On Wall Street, Porter was known as a gentle and courteous giant. In his company, one invariably felt his hand on one’s shoulder at a doorway; Porter insisted on entering second. He had an abhorrence of foul language and would walk out of a bar rather than be subjected to it.”
Grant said Porter “quoted from a seemingly infinite personal store of reading, historical anecdote and country-and-western song lyrics,” and he offered an example of a Porter e-mail that began:
“The Everly Brothers had a song entitled ‘Nobody Calls from Las Vegas Just to Say Hello.’ Similarly, no one writes mid-afternoon just to say ‘Hello.’ So I’m writing to ask a favor.”
Alpheus Alexander Porter Jr. was born on Dec. 12, 1938, in Charlotte, North Carolina. His father, Alpheus Sr., was a banker with Union National Bank, predecessor of Wells Fargo & Co. His mother, the former Fradonia Brown, was a real-estate broker in Charlotte.
He received a bachelor’s degree in English in 1960 from Davidson College in Davidson, North Carolina, where he played football on a scholarship and also wrestled.
He began his career with Interstate Securities Corp. in Charlotte, according to a biography on the Amici website. In 1964 he moved to New York to work as an investment analyst.
He joined A.W. Jones as a portfolio manager in 1967. The firm, founded in 1949, is credited with employing the first hedging strategy. Porter, a probationary hire, was asked to manage a hypothetical $1 million portfolio, which he “promptly lost,” Grant said. He was given a second chance and stayed.
In 1972, he joined Sanford C. Bernstein & Co. -- now AllianceBernstein Holding LP -- then set out on his own in 1974 to create his own firm. In 1976 it started its first fund, Amici Associates LP, which remains one of the hedge funds managed by Amici Capital.
The name Amici -- “friends” in Latin -- reflected the fact that of 30 people Porter solicited for startup money, only three friends came through, writing checks totaling $360,000.
In 1998, Porter and Grant formed Nippon Partners LP, a hedge fund to invest in small-cap Japanese companies that were trading at less than net asset values. That venture lasted until the end of 2010.
In 2005, according to the Charlotte Observer, Porter said his firm, then Porter Orlin Inc., would not register with the U.S. Securities and Exchange Commission, which had passed a rule requiring registration by hedge-fund advisers with 15 or more clients.
“There are 8,000 hedge funds,” he said at a panel discussion at Queens University in Charlotte, according to the newspaper. “Some need regulations. I’d like to think we don’t.”
In 2006, a three-judge panel of the U.S. Court of Appeals in Washington unanimously struck down the rule, citing the complexities in regulating something -- hedge funds -- that isn’t mentioned in U.S. securities laws.
Porter served as a trustee of the Library of America, a nonprofit publisher of classic American literature, and the New York-based John Simon Guggenheim Memorial Foundation, which supports the work of scholars, scientists and artists.
He married in the 1960s and was divorced after about seven years, his niece said.
Survivors include his sister, Sarah Porter Boehmler, and two other nieces.