An article about David.
Math whiz donates hundreds of millions
Conservation causes benefit
Kenneth R. Weiss, Los Angeles Times
Sunday, November 7, 2004
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He has given more money to conservation causes in California than anyone else. His gifts have helped protect 1,179 square miles of mountain and desert landscapes, an area the size of Yosemite National Park.
His donations to wilderness education programs have made it possible for 437,000 inner-city schoolchildren to visit the mountains, the desert or the beach -- often for the first time.
Over a decade of steadily growing contributions -- including more than $100 million to the Sierra Club -- this mathematician turned financial angel has taken great pains to remain anonymous.
In manner and appearance, David Gelbaum has maintained a low profile for someone who can afford to give away hundreds of millions of dollars.
At age 55, retired from the rarefied world of Wall Street hedge funds, he lives in Newport Beach (Orange County) with his wife and two of his four children in a large home where visitors on occasion have mistaken him for the gardener. Bespectacled, 5-foot-5 and slightly built, he speaks softly, barely above a hoarse whisper. He drives a Honda Civic hybrid, wears jeans and T- shirts to business meetings and helps the kids clean up at the wilderness camp- outs he sponsors.
Those who know him say he is never more uncomfortable than when asked to talk about his wealth or how much of it he has given away.
His donations, which according to public records and other sources total at least $250 million, have preserved hundreds of miles of wildlife corridors across mountains and deserts, tying together once-isolated national parks and wilderness areas. One conservation deal, land trust experts say, is the largest single purchase of private land ever handed over to the U.S. government for one purpose: to leave it alone.
He has given more than $20 million to schools in Orange County and handed over 108 rolling acres in the foothills of the Santa Ana Mountains for use as an outdoor-education camp.
He has contributed $3.5 million to Orange County Sheriff Michael S. Carona's foundation to help the poorest children attend the camp's wilderness programs. Carona is both grateful and a bit mystified by the benefactor.
"He's one of these strange guys who doesn't want any publicity but wants to take care of kids and the community," Carona said. "When you look him in the eye and say, 'You've made a positive change in these kids' lives,' he does not want to take any credit for it. He's almost embarrassed when you say thank you to him."
(A federal grand jury recently subpoenaed financial records of Carona's foundation. Federal officials have not disclosed why they want the documents.)
Gelbaum, a native of Minnesota who moved to California as a teen, was a math prodigy who parlayed his talents into a highly lucrative three-decade career using mathematical formulas to pick stocks and bonds for wealthy investors in hedge funds.
He won't say how much he made. He started giving his money away in ever- larger amounts in 1994.
"Most wealthy people spend their lives trying to make more and more money rather than give it away," Gelbaum said during a series of interviews that he agreed to only reluctantly. "They wait too long. They are depriving themselves of a lot of joy. I'm doing what I want to do. It's not like it's money that I or my family will ever need.
"It's a joy to see this land preserved and opening these kids' eyes to the natural world. It's not like burning the money. It goes into the land or into the kids' experiences. Both last forever.''
Gelbaum said his interest in land conservation was inspired by camping trips he took with his father and brothers to lakes in northern Minnesota, as well as Yellowstone National Park and Mount Whitney. ''Those were the happiest memories of my childhood.''
It isn't enough, he said, ''to protect wilderness just for people who can afford to go to it. I think bringing kids out to the wild is unquestionably the right thing to do. These kids have pretty tough lives. It opens their eyes to the world outside of their neighborhood. Some of the kids will grow up to protect the land they learn to love. You could look at it as an investment into the environment.''
When making donations, Gelbaum usually insists that his identity not be revealed -- out of concern, he says, for his family's security.
Besides, he said, ''I don't think that if you have a lot of money and you give away a lot of money, you should get a lot of recognition. You shouldn't be able to buy that.''
Gelbaum has made his largest contributions to the 10-year-old Wildlands Conservancy, an Oak Glen, San Bernardino County, group that he co-founded with David Myers, who has remained the group's executive director.
Myers, an ardent environmentalist, wanted to sell 640 acres of desert land he owned near Yucca Valley and use most of the proceeds for other conservation projects. In 1994, he placed a newspaper ad seeking ''a conservation-minded donor'' who would buy, but not develop, the land. Gelbaum answered the ad. They have been working together ever since.
Gelbaum now acknowledges that he has been the biggest benefactor of the conservancy and its sister organization, the Wildlands Endowment Fund, which has taken in $157.8 million for land preservation, outdoor education and related programs.
But for the last decade, Myers avoided revealing the identity of his reclusive angel, despite growing curiosity about who was bankrolling this obscure conservation organization that was buying and swapping real estate with the gusto of a 19th century land baron.
Born in Minneapolis, the second of four sons, Gelbaum moved to California when his father, Bernard Gelbaum, became founding chairman of the UC Irvine math department.
David Gelbaum showed early prowess in math, taking calculus at UC Irvine while still in high school. Months before he graduated from UC Irvine in 1972, he was hired by math Professor Edward Thorp to help with a business that needed a math researcher.
Thorp, who wrote ''Beat the Dealer,'' about how to count cards and win at blackjack, was applying mathematical wizardry to the largest craps game in the world: Wall Street.
His formulas, which later appeared in his book ''Beat the Market,'' led him to launch the nation's first market-neutral hedge fund -- one intended to make money for investors whether the market goes up or down. From 1970 to 1989, the fund never had a losing quarter and increased investors' money more than 13-fold.
Gelbaum was one of his first math researchers hired to track and exploit the price discrepancies between a company's stocks and its options, warrants and convertible bonds.
''He was smart. He was idiosyncratic. He was always looking for more,'' Thorp said.
The firm, called Princeton-Newport Partners, came to an abrupt end in 1989 when five of the firm's stockbrokers in Princeton, N.J., were convicted of scheming to create illegitimate tax losses. The convictions were overturned on appeal. Neither Thorp nor Gelbaum was implicated in the scandal.
Gelbaum emerged from the wreckage as a principal in a new investment firm, operating a new hedge fund using math formulas pioneered by Thorp.
Gelbaum declined to talk about the firm, Sierra Enterprises Group, from which he retired a few years ago. His business success, he said, ''was all a matter of chance. It certainly wasn't because I worked 5,000 times as hard as the average person or was 5,000 times smarter than the average person.''
He was more forthcoming about his foray into the cattle business. In the mid-1990s, he bought a pair of ranches to run in an environmentally sensitive manner.
The Kane and Two-Mile ranches are in northern Arizona, a place Gelbaum learned about in a college ecology class. This is where Theodore Roosevelt once hunted mountain lions to reduce predators and increase the deer herd. The deer population soared and then starved in what became a textbook case of disrupting nature's balance chronicled by America's foremost ecologist, Aldo Leopold, in ''A Sand County Almanac.''
''It caught my imagination,'' Gelbaum said. So he bought the ranches and arrived with a message. ''I told people when I came to Arizona I wanted to be good to the land and good to the people.''
He won praise for removing cattle from wilderness areas and for raising wages of the cowboys and providing them housing and health care. He recently agreed to sell the ranches to the Grand Canyon Trust, a conservation group, for $4.5 million.
The ranches cover about 1,000 acres and control grazing rights on 900,000 acres of surrounding federal land.
Four years ago, President Bill Clinton turned a large swath of these grazing lands into the Vermillion Cliffs National Monument, and Gelbaum won the admiration of then-Interior Secretary Bruce Babbitt.
Babbitt's plan provoked the ire of local ranchers, who complained that it would run ranchers off good grazing land. At the height of the protests, Gelbaum's ranch manager stood up in a packed meeting hall and explained that his boss controlled all of the grazing rights in the area and considered the monument perfectly compatible with his ranching operations.
The speech hushed the protesters and allowed the monument to go forward.
''I half-thought about recommending to the president to name the national monument after David Gelbaum,'' Babbitt said. ''Without David Gelbaum, it might well not have happened.''
