Who is Barry Rosenstein, the New York financier who bought a Hamptons home for $147 million? In his recent book, “House of Outrageous Fortune,” about 15 Central Park West, author Michael Gross exposed a little about Rosenstein — a portrait that so infuriated the hedge funder that he complained to the building’s management. Here’s what has him so fired up:
Barry Rosenstein likes to tell a story about his mercurial rise to become one of the richest men in America.
While working for Merrill Lynch in the mid-1980s, he found that his Armani suits rubbed his colleagues the wrong way. His New Jersey upbringing lacked “the pedigree and patina of those WASP-y guys,” he has said.
So he cold-called Asher Edelman, an infamous finance guy who served, in part, as the basis for Michael Douglas’ character Gordon Gekko. Rosenstein talked his way into a job at his firm, which mixed hedging, arbitrage, investment banking and activism, and became an Edelman protégé.
By Rosenstein’s account, he boldly asked for $1 million in salary, and Edelman agreed.
Edelman recalls the lunch, but debunks Rosenstein’s creation myth.
“He asked for a hundred thousand dollars,” Edelman says, “and I said, ‘We can’t go that far.’ Think about it! He was 24 years old and he was hired to crunch numbers, nothing else.”
Chutzpah is not a negative in finance, though, and Barry Rosenstein has plenty to spare. He may not have started at $1 million a year, but it didn’t take him long to surpass that.
The hedge fund he runs, JANA Partners, has an estimated $7 billion under management. Last year, according to Institutional Investor, Rosenstein took home $250 million. Forbes once listed his personal worth at $1.3 billion.
Along the way, he’s become infamous for his purchases — both professionally and personally.
As an activist hedge funder, Rosenstein, 54, is the kind of guy who, if he starts buying shares of a company, its workers gird their loins. JANA’s typical strategy is to acquire a controlling interest, then force some kind of reorganization to “unlock value.”
In 2011, he forced a split of the 100-year-old publisher McGraw-Hill. JANA has sought to break up agriculture supplier Agrium, movie-rental firm Redbox and oil company Marathon Petroleum. He’s pressuring Walgreens to move its corporate headquarters to Switzerland from Illinois to save money on taxes.
A recent Barron’s story praised his “velvet glove” approach to activist investing, but his successes are usually measured by the increase in a stock price, not how many jobs were upended or eliminated in the process. For instance, the Chicago Tribune reported in December that after JANA invested $300 million in grocery company Safeway, it demanded the chain exit “subscale and lower-margin geographies.” Safeway closed 70 stores, laying off 6,000 workers.
It’s indicative of his approach to investing that one of Rosenstein’s early funds was called Piranha. He once bragged to The Wall Street Journal about making a corporate opponent retch in a meeting. A buff man with a receding hairline, Rosenstein alternates between jeans and striped shirts (in the office) and handmade Italian suits (for meetings when he seeks to intimidate).
Rosenstein is the middle child of a tax accountant from West Orange, NJ. He was suspended from high school for spray-painting the basketball coach’s garage.
After studying accounting at Lehigh University, Rosenstein got an MBA at Wharton and went to work for Merrill Lynch, before his famous lunch with Edelman.
In 1986, he married his wife, Lizanne, at The Plaza. They had four children — and in 2001, when Rosenstein decided to strike out on his own, he used their initials in naming it JANA.
Rosenstein hoped to take advantage of the dot-com stock collapse and the growing skepticism about corporate management after the fall of such companies as Enron, Tyco and Worldcom.
As an activist hedge funder, he is the kind of guy who, if he starts buying shares of a company, its workers gird their loins.
- Michael Gross
His first big target was Herbalife, the distributor of weight-loss and nutritional supplements that had been (and is still) accused of being a pyramid scheme. Rosenstein doubled his money after forcing Herbalife’s sale, then merged JANA with Marathon Advisors, a hedge fund run by Gary Claar, to increase his war chest.
JANA has taken part in dozens of activist campaigns, and they’ve brought Rosenstein great wealth. They also made him controversial.
In 2004, when JANA’s assets hit $2 billion, the head of a data-processing company accused it of spreading lies about the firm. The next year, Kerr-McGee, an Oklahoma oil company, sued Rosenstein as well as Carl Icahn, who had joined JANA in a proxy fight. Kerr-McGee accused them of violating a federal law requiring disclosure of an investment. But Rosenstein’s pugnacious strategy bore fruit. Between 2003 and 2006, JANA earned annual returns of more than 30 percent.
With the proceeds of these deals, Rosenstein spends big. He bought a $29 million duplex apartment in one of the city’s most exclusive addresses, 15 Central Park West, then spent millions getting it to his standards.
His design team opened up the public rooms, dispensing with curtains and doors, aside from the five sets of French doors to the 10-foot-wide, L-shaped terrace. Solar shades that are invisible when retracted are the only window treatments. LED lighting that mimicked natural light was installed on the ceiling of the switchback staircase to the 17th floor.
The walls are covered with limestone-colored Venetian plaster and Japanese tamo paneling. Custom zebrawood floors were added, and a heated wood floor was installed for a yoga studio.
Rosenstein has said he starts every day with a long yoga session. After he was seriously injured in a wind-surfing accident in 1992, doctors told him he needed surgery, but Rosenstein turned to yoga instead and has since become a devotee.
Rosenstein filled the beige, pale gray and white apartment with modern art, including two Warhols, a John Chamberlain car-crash sculpture, a small, early Roy Lichtenstein painting, and a large Gerhard Richter canvas over the ebony-and-rosewood table and leopard-print chairs in the dining room. Above the table hangs a delicate alabaster-and-bronze chandelier.
Elsewhere, interior decorator Orlando Diaz-Azcuy placed an Axel Salto vase, Chinese bronze vessels, a Hiroshi Sugimoto photograph, a grand piano, and a mix of mid-century modern antiques and spare modern furniture. The Rosensteins’ desire for comfortable, informal furniture and fabrics led their decorator to dub them “Mr. and Mrs. Chenille.”
Money can buy you more than just stuff: It all took only eight months to complete.
All this pales, of course, next to Rosenstein’s purchase early this month of a Hamptons home for $147 million — the most ever paid for a private residence in the United States.
The 18-acre beachfront property has an elaborate garden that was the dream of its former owner, the late Christopher H. Browne, complete with foot paths and bridges over a pond.
Rosenstein is not happy when his extravagant spending is made public (even though the details about his apartment appeared in a book on his interior designer).
After I revealed he was a 15 Central Park West resident in my book, he wrote a letter to management calling it “a tragic violation of privacy.”
Now, Page Six reported last week, he’s hunting for another apartment in Manhattan to escape the spotlight on Fifteen.
His budget: Only $60 million.
Adapted from “House of Outrageous Fortune: Fifteen Central Park West, the World’s Most Powerful Address” by Michael Gross. Copyright © 2014 by Idee Fixe Ltd. Reprinted by permission of Atria Books, a Division of Simon & Schuster Inc.