Gerald Tsai, Innovative Investor, Dies at 79

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BRIAN STELTER
BRIAN STELTER

Published: July 11, 2008

Gerald Tsai Jr., a fund manager and financier who pioneered the creation of performance funds in the 1950s and ’60s and later turned a canning company into the financial services giant Primerica, died Wednesday in Manhattan. He was 79.

 

William E. Sauro/The New York Times
Gerald Tsai Jr. in 1988.

The cause was multiple organ failure, said his son Christopher.

Primerica and a subsidiary Mr. Tsai once led eventually became building blocks of Citigroup. But Mr. Tsai was perhaps most famous for his skill in building mutual funds.

He was not yet 30 when he started Fidelity Investments’ first aggressive growth fund in 1958, riding it to great success and a large personal fortune. Mr. Tsai spurred the popularity of “momentum investing,” as his funds swiftly moved money from one hot growth stock to another. He joined the Fidelity Management and Research Company in 1952 as a security analyst and, six years later, at the age of 29, started the company’s first aggressive growth fund. By 1963, he was an executive vice president.

At Fidelity, Mr. Tsai “showed himself to be a shrewd and decisive picker of stocks for short-term appreciation,” John Brooks wrote in the book “The Go-Go Years: The Drama and Crashing Finale of Wall Street’s Bullish 60s” in 1973. “So swift and nimble in getting into and out of specific stocks that his relations with them, far from resembling a marriage or even a companionate marriage, were more often like that of a roué with a chorus line.”

Mr. Tsai’s skills as the manager of performance-oriented mutual funds became legendary. In 1965, with the encouragement of his mother, Ruth, Mr. Tsai established the Manhattan Fund, a mutual fund that won him widespread attention. When the fund first offered shares, a modest offering of 2.5 million shares quickly ballooned to a total of 27 million, bringing the fund $247 million in capital and representing what was at the time the biggest offering in investment company history.

Mr. Tsai knew when to buy, and more importantly, when to sell. In 1968, he sold the fund to the CNA Financial Corporation, just as its stellar success — and the bull market that it rode — were starting to wane. Reports at the time said he walked away $30 million richer.

In the 1980s, Mr. Tsai injected energy into the American Can Company, a container production and food packaging business, which was starting to shift toward the more lucrative financial-services sector. American Can in 1982 bought the Associated Madison Companies, a life insurance company where Mr. Tsai had been chairman; he was named executive vice president of financial services. By 1987, when the company changed its name to Primerica to reflect its financial focus, Mr. Tsai was the chief executive, making him the first Chinese-American to lead a Dow Jones industrials company.

A year later, Primerica and Commercial Credit Group, headed by Sanford I. Weill and including the firm that later became known as Citi Smith Barney, were combined in a $1.65 billion deal. Mr. Tsai remained the largest shareholder but handed day-to-day management to Mr. Weill.

In 1993, he re-entered the insurance industry, becoming the chief executive of the Delta Life Corporation.

Gerald Tsai Jr. was born on March 10, 1929, in Shanghai, and moved to the United States 18 years later. He spent one semester at Wesleyan University before transferring to Boston University, where he received bachelor’s and master’s degrees in economics. He quickly put them to use, becoming a securities analyst at Bache & Company in 1951, before joining Fidelity one year later.

His marriages to Loretta Young, Marlyn Chase, Cynthia Ann Ekberg and Nancy Raeburn ended in divorce. Besides Christopher, he is survived by two other children, Veronica and Gerald, and five grandchildren. In 2006, Mr. Tsai became engaged to marry Sharon Bush, the former wife of President George W. Bush‘s brother Neil, but the marriage was called off in January.

Christopher said Mr. Tsai shared his enthusiasm for the stock market with his children. He encouraged Christopher to learn about the markets at an early age, prompting him to start investing at 12.

“He loved doing transactions.” Christopher said. “He loved the excitement of it.”

http://www.nytimes.com/2008/07/11/business/11tsai.html?_r=1&ref=obituaries&oref=slogin

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