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Who

Eddie Lampert is the billionaire founder of the hedge fund ESL Investments. He's best known for carrying out one of the biggest gambles in distressed investing history—the purchase of Kmart out of bankruptcy and merger with Sears—and for his high-profile kidnapping in 2003.

Backstory

Raised in Roslyn on Long Island, Lampert's father died when he was 14, a development that forced his stay-at-home mom to take a job stocking shelves at Saks. A financial aid package allowed him to attend Yale—he majored in economics and joined Skull & Bones —and he initially considered following in his father's footsteps, earning admissions to Yale and Harvard law schools as a college senior. But he decided to head into finance instead and joined Goldman Sachs in 1984 as a member of Bob Rubin's risk arbitrage group. Just four years later, though, Lampert was on the move: When Texas buyout kingpin Richard Rainwater offered him the financing to go out on his own, Lampert leapt at the chance and with $28 million in capital from Rainwater, Lampert moved to Texas to start up ESL in 1988. The partnership was short-lived: When the duo clashed over the direction of the firm, Lampert moved his operation to Greenwich. He's been building his hedge fund ever since, and today presides over one of the most respected hedge funds in the country, managing more than $30 billion for the likes of David Geffen, Michael Dell, the Tisches (Jim, Tom, Andrew), the Ziffs (Dan, Dirk, Robert), Dan Och, and Marty Whitman.

Of note

For much of the 1990s, Lampert was content making passive investments in companies like IBM and American Express. He shifted his approach in the late 1990s when he started sticking his hands in the operational wheels: With both Auto-Zone and AutoNation, Lampert pushed for significant cost cuts and management changes, and in both cases made a bundle in the process. Lampert became the face of the industry's high-profile move into the buyout arena when he purchased Kmart out of bankruptcy in 2003 and then merged the company with Sears in an $11 billion deal in 2004. He quickly set a new strategic direction for the company, shedding real estate holdings and slashing expenses in order to improve the bottom line.

The deal may very well turn into Lampert's greatest albatross. His cost-cutting measures left the chain's stores threadbare and uncompetitive and 2007 sales declined precipitously; the turmoil has resulted in a revolving door of senior executives as well as charges that Lampert himself has been too involved in details that should be left to retail industry experts. The plunge in Kmart's stock price was bad news for investors in Lampert's hedge fund, who witnessed the fund plunge 26 percent in 2006 (just his second losing year since ESL was founded). Several other investments he made in 2007-8 also proved uncharacteristically untimely. He made a big bet on Citigroup five months before the company announced billions in losses, ousted its chief executive, Chuck Prince, and saw its stock fall to record lows.

Keeping score

Lampert was the first hedge fund manager to earn more than $1 billion in a year in 2004. He's now worth nearly $3 billion according to Forbes. Needless to say, he didn't take home nine-figures during in 2007 following the fund's dismal performance.

For the record

If you're interested in handing over your money to Lampert—and given recent events, that may not be the best idea—you'll need to put down a minimum of $10 million; unlike hedge funds that allow quarterly or annual redemptions, Lampert imposes stiff penalties if you take any money out during the first five years.

Drama

On January 10, 2003, Lampert was kidnapped outside his office by four men, including a 23-year-old ex-Marine. The captured billionaire was taken to a nearby Days Inn where he was bound him up in the bathtub; the kidnappers then called his wife and requested $1 million in ransom. The dimwitted criminals might have gotten away with the crime had they not been dumb enough to use one of Lampert's credit cards to order a pizza: Lampert pointed out that the police would probably be tracing charges to his card, and convinced his captors to cut their losses and let him go; he was released on the side of the highway after 30 hours in captivity. (The police later apprehended the kidnappers who confessed they'd targeted Lampert after looking up a list of rich people in the internet.) These days, step within 15 feet of Lampert and you'll find yourself confronted by two burly bodyguards.

Namedrop

Hedge fund manager Steven Mnuchin (the son of Bob Mnuchin) was once Lampert's roommate and now serves on the board of Kmart. Richard Perry also serves on Kmart's board and used to work alongside Lampert in Goldman's arbitrage group. Fellow hedge funder Dan Och also worked alongside Lampert at Goldman, and is now an investor in ESL. Another Kmart board member: Emily Scott, a co-founder of J. Crew and the founder of Plum TV with her husband, Tom Scott. Lampert's right hand at ESL is Bill Crowley. Thomas Bell at Simpson Thacher often fields Lampert's legal work. And it's Julien Farel who is responsible for trimming the (transplanted) hairs on the top of the billionaire's head.

Campaign trail

Lampert's ties to George Bush go back nearly two decades. When Lampert worked with Rainwater in Texas, he joined the consortium of investors that purchased the Texas Rangers baseball team, a group led by George Bush. (Other investors in the team included Roland Betts and Tom Bernstein.) Although Lampert donated to Bush in the 2004 election, he has yet to make any donations in the 2008 presidential contest.

Personal

Eddie is married to Kinga Lampert, a former corporate lawyer. (They met on a blind date after being set up by a mutual friend.) The couple has three children and lives on a waterfront estate in Greenwich that Lampert purchased for $21 million in 1999. He tore down the existing residence and spent more than a year constructing a new home on the property.

No joke

Despite Lampert's riches, you won't find a Gulfstream jet with his name on it. He's afraid of flying and only travels by air when he absolutely has to.