Sorry I meant crazy in a way you would say it’s crazy that someone could make so much, not crazy as in like no way that’s true. I believe it, D&C is a great firm. Also the Fidelity CEO Abby Johnson is the founders granddaughter, I don’t think there’s any chance you could make 10s of billions as the ceo of one of these firms if you’re not a founder/received all the founders equity. You can still make tons though, but she is a special situation.

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Imagine you stumble upon VMWare in late 2015 and accurately determine that the stock is seriously undervalued. You start going through your firm's (D&C) notoriously slow committee process to buy the stock so your clients can benefit from your discovery. You know that the investment committee will want to hold the stock for 5+ years, which is fine because you are a long-term investor at heart and your thesis for the stock is long-term in nature. You are so excited about this opportunity that you buy some shares for your personal portfolio months before the investment committee approves it for the firm.

Seven years later, both you and the firm are holding the stock and it has done fantastically well. You balled for your clients and you did it honorably, checking every compliance box and preserving your integrity as an investor. Now imagine some midwit reporters from ProPublica accuse you of "front-running" your firms trades (and it appears they don't even know what front-running is). I would be so pissed lmao

Edit: but ya to answer OP's question D&C pays out the wazoo if you've been around for a while


Genuine question here. Is this not what front-running looks like? Especially for someone getting paid that much by clients, it is hard to justify buying the shares for personal profit while also pitching for it to be bought by the firm. Maybe he did check every compliance box, but I am not sure about him preserving integrity as an investor. In any case, it was obvious that if the story got out, it would be a major hit to the firm's reputation, regardless of whether foul play was involved. Just this potential hit to the firm's reputation should have made the analyst rethink the decision to buy the stock for personal profit.


Over time periods longer than a few days, changes in expectations move stock prices much more than a single firm's trades. During the 3 quarters when D&C was building their position, somewhere between $50-60bn worth of VMWare shares were traded. D&C's $700mn position would have accounted for ~1% of this trading volume.

If Hoeft had placed his trade a few days or even hours before a large block trade from D&C then that would be clear-cut front-running. But Hoeft didn't even know if D&C would buy the stock when he placed his trade, all he knew was the stock was undervalued and he had the balls to buy the stock with his own money. Speaking of client alignment, it's a huge green flag when a manager aligns his personal wealth with that of his clients. Even more so when he does it skillfully, 3xing client money in 3 years.

This is article is pure, bad-faith mudslinging from journalists who don't understand how the industry works.


This story is so dumb. At my fund we also can’t trade things the firm intends to trade but if I’m recommending something to our PMs and know it’s going to take a little while to have a decision on whether or not they’ll buy in the fund, but I like it, I generally will buy ahead of that. Doesn’t mean I’m front running, just means I don’t want my PA investment decision to be held up on my PMs’ timeline. On the other hand, our institutional clients probably prefer that their ownership decision be routed through the PMs even if it takes a little longer.


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