ESL Investments

What is ESL Investments?
ESL Investments, Inc. is based in Greenwich, Connecticut and is a hedge fund sponsor. It was founded in 1988 by Edward Lampert. Today, it is one of the most successful firms of its kind.

Edward Lampert, considered by many to be the "next Warren Buffet," is one of the richest people in the United States and has a long, successful history as an investor and businessman. A 1984 graduate of Yale University, he interned at Goldman Sachs upon graduation and then worked in the firm's arbitration department from 1985-1988. He founded ESL Investments just 4 years after graduating from Yale.

Lampert was given $28 million in seed money by Richard Rainwater, a famous American investor and fund manager. He also helped Lampert get his start by putting him into contact with some of his first clients.

In addition to founding ESL Investments, he is the chairman of Sears Holdings Corporation and was a director of AutoNation and AutoZone. He was considered instrumental in the merger of Sears and Kmart. As an interesting side note, he was kidnapped from his office parking lot, then released after two days.

Hedge funds employ a number of different types of investment strategies. These range from using leverage to utilizing very little or no leverage at all. In addition, a number of hedge fund strategies are designed to reduce stock and market risk. Also, derivatives are seldom used, and when they are it is only for hedging.

ESL Investments relies on a primarily contrarian approach to its investments. Contrarian investing prefers to go "against the crowd" with regards to investing. Contrarian investors, then, tend to look for buying and selling opportunities that are often the opposite of what the rest of the investors at that time are doing. However, this doesn't necessarily mean they go to an approach that is the exact opposite of what the other investors are doing; instead, they prefer to go with an approach no one has thought of yet.

Contrarian investing was also the preferred method of other successful investors, including Warren Buffet.

About hedge funds
ESL manages hedge funds, which are private and unregistered investment pools. This type of investment is similar to mutual funds because they both pool investors' money, then turn around and invest it collectively. The term "hedge" refers to the wide range of different techniques to safeguard the investors from a loss on their investments.

Unlike mutual funds, hedge funds is that they follow different rules and regulations by the United States. Mutual funds are regulated by a number of Acts, including the Securities Act and the Investment Company Act. They are exempt from a number of requirements that mutual funds have in order to protect investors, including regulations that require investments have a certain amount of liquidity, that require shares be redeemable at any time, and the limited use of leverage. Basically, these requirements don't apply to hedge funds since they are private and unregistered.

Hedge funds are invested in by a diverse group of people and organizations for the purpose of minimizing their overall risk in investments and increasing their rates of return. People with high net worth, insurance companies, banks, and endowments all invest in hedge funds. Generally speaking those who are more advanced and sophisticated investors who understand the market very well will invest in hedge funds.
ESL Investments is a successful hedge fund sponsor based in Connecticut.