Steven Eisman (//; born July 8, 1962) is an American businessman and investor known for having shorted collateralized debt obligations (CDOs), thereby profiting from the collapse of the US housing bubble in 2007-2008.
July 8, 1962
|Alma mater||University of Pennsylvania (BA)|
Harvard Law School (JD)
|Occupation||Managing Director and Portfolio Manager at Neuberger Berman|
|Known for||Betting against subprime mortgages during the 2008 Financial Crisis|
|Spouse(s)||Valerie Feigen (m. 1989)|
Early life and educationEdit
Eisman grew up in New York City, where he attended Yeshiva schools. He attended the University of Pennsylvania, graduating magna cum laude in 1984. He then graduated from Harvard Law School with honors.
Eisman rose to fame betting against collateralized debt obligations at Greenwich, Connecticut-based FrontPoint Partners LLC, a unit of Morgan Stanley. By 2010, he managed more than US$1 billion for FrontPoint, and gained prominence after being profiled by Michael Lewis in his book The Big Short: Inside the Doomsday Machine. In the movie adaptation of Lewis' book, The Big Short, Eisman's name was changed to Mark Baum, and was portrayed by actor Steve Carell. He left FrontPoint Partners in 2011 amid investor withdrawals following allegations that Joseph F. "Chip" Skowron, co-manager of the firm’s health-care portfolio, traded on insider information.
In 2012, Eisman founded Emrys Partners with $23 million in seed capital. The fund performed poorly in 2012, returning 3.6% and underperforming the market. It did better in 2013, returning 10.8% but still underperforming the market. In July 2014 he announced that he was shutting down the fund, explaining his decision by stating that "making investment decisions by looking solely at the fundamentals of individual companies is no longer a viable investment philosophy." The fund controlled an estimated $185 million in assets at the time of its dissolution.
In September 2014, Eisman joined Neuberger Berman as a Managing Director and a Portfolio Manager for the Eisman Group within Neuberger Berman’s Private Asset Management division. The group, run by partners including Steve's parents, Elliott and Lillian Eisman, manages portfolios of stocks for wealthy clients.
Campaign against for-profit collegesEdit
Eisman is a strong opponent of for-profit institutions of higher education. During a speech entitled "Subprime Goes to College" during the Ira Sohn Conference in May 2010 Eisman attacked companies that run private colleges such as Think ITT Educational Services, Corinthian Colleges, and Education Management Corporation. Eisman likened such companies to seedy mortgage brokers. From his presentation:
- "Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry. I was wrong. The for-profit education industry has proven equal to the task."
After the Department of Education took action against for-profit colleges in 2010, the industry retaliated by accusing Eisman of attempting to illegally influence the government and calling for an investigation by the Secretary of Education. The allegations stem from a meeting that Eisman had with Department of Education officials David Bergeron and Robert Shireman, two weeks before delivering his speech at the Ira Sohn Conference. Shireman was in charge of the department's efforts to toughen regulations on for-profit colleges.
After offering testimony to Senate Health, Education and Labor Committee on problems with for-profit higher education, Eisman was criticized by progressive groups such as Citizens for Responsibility and Ethics in Washington on the grounds that he stood to profit from proposed regulations due to his short positions against private colleges.
- "All of the Above: Education" (PDF). The Pennsylvania Gazette: 35. January–February 2011. Retrieved 12 February 2016.
- Lewis, Michael (September 27, 2010). "Excerpt from The Big Short: Inside the Doomsday Machine". The Financial Times. Retrieved February 12, 2016.
- Solin, Daniel (17 September 2014). "The Shocking Admission of This Shuttered Hedge Fund Manager". U.S. News & World Report. Retrieved 20 November 2014.
- Juliet Chung (July 3, 2014). "Emrys Partners Hedge Fund Shuts Down". Wall Street Journal.
- Jessica Pressler (5 August 2010). "Steve Eisman's Outspokenness, Orchid Habit May Have Caused Rift With Morgan Stanley". New York Magazine.
- Kroll, Andy (27 May 2010). "Steve Eisman's Next Big Short: For-Profit Colleges". Mother Jones.
- Did Steve Eisman unduly influence the Education Dept.?, by David A. Kaplan, Fortune, 2 November 2010
- Why Are Progressives Fighting Student-Loan Reform?, by Mike Elk, The American Prospect, 6 October 2010
- "Valerie Feigen, A Lawyer, Weds". The New York Times. 8 September 1989.