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Richard Rainwater

Richard Rainwater

Overview

The son of a wholesale grocer, he grew up in Fort Worth, Texas
Fort Worth, Texas
Fort Worth is the 16th-largest city in the United States of America and the fifth-largest city in the state of Texas. Located in North Central Texas, just southeast of the Texas Panhandle, the city is a cultural gateway into the American West and covers nearly in Tarrant, Parker, Denton, and...

. He graduated from the University of Texas with a degree in mathematics, where he was a member of the Tau chapter of the Kappa Sigma
Kappa Sigma
Kappa Sigma , commonly nicknamed Kappa Sig, is an international fraternity with currently 282 active chapters and colonies in North America. Kappa Sigma has initiated more than 240,000 men on college campuses throughout the United States and Canada. Today, the Fraternity has over 175,000 living...

 fraternity
Fraternity
A fraternity is a brotherhood, though the term usually connotes a distinct or formal organization. An organization referred to as a fraternity may be a:*Secret society*Chivalric order*Benefit society*Friendly society*Social club*Trade union...

. He was recognized by the national organization in 1996 as Kappa Sigma Man of the Year. He then went on to earn his MBA from Stanford Business School.

After business school, Rainwater landed a job as an investment banker, but soon accepted an invitation from former Stanford classmate Sid Bass
Sid Bass
Sid Richardson Bass is an American investor and businessman.-Life:He is a graduate of Yale University and Stanford Business School. His father, Perry Richardson Bass , built an oil fortune with uncle, Sid Richardson . Bass took control of the business in 1968. His investments include oil and gas...

 to manage and diversify the Bass family portfolio.
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Early life


The son of a wholesale grocer, he grew up in Fort Worth, Texas
Fort Worth, Texas
Fort Worth is the 16th-largest city in the United States of America and the fifth-largest city in the state of Texas. Located in North Central Texas, just southeast of the Texas Panhandle, the city is a cultural gateway into the American West and covers nearly in Tarrant, Parker, Denton, and...

. He graduated from the University of Texas with a degree in mathematics, where he was a member of the Tau chapter of the Kappa Sigma
Kappa Sigma
Kappa Sigma , commonly nicknamed Kappa Sig, is an international fraternity with currently 282 active chapters and colonies in North America. Kappa Sigma has initiated more than 240,000 men on college campuses throughout the United States and Canada. Today, the Fraternity has over 175,000 living...

 fraternity
Fraternity
A fraternity is a brotherhood, though the term usually connotes a distinct or formal organization. An organization referred to as a fraternity may be a:*Secret society*Chivalric order*Benefit society*Friendly society*Social club*Trade union...

. He was recognized by the national organization in 1996 as Kappa Sigma Man of the Year. He then went on to earn his MBA from Stanford Business School.

Career


After business school, Rainwater landed a job as an investment banker, but soon accepted an invitation from former Stanford classmate Sid Bass
Sid Bass
Sid Richardson Bass is an American investor and businessman.-Life:He is a graduate of Yale University and Stanford Business School. His father, Perry Richardson Bass , built an oil fortune with uncle, Sid Richardson . Bass took control of the business in 1968. His investments include oil and gas...

 to manage and diversify the Bass family portfolio. Rainwater became the chief financial architect for the Bass family investments. He was given $5 million to invest during his first year and managed to lose it all. Rainwater then sought a more methodical investment strategy by speaking to investors like Warren Buffett
Warren Buffett
Warren Edward Buffett is an American business magnate, investor, and philanthropist. He is widely regarded as one of the most successful investors in the world. Often introduced as "legendary investor, Warren Buffett", he is the primary shareholder, chairman and CEO of Berkshire Hathaway. He is...

 and Charles Allen, Jr., while also studying the work of Benjamin Graham
Benjamin Graham
Benjamin Graham was an American economist and professional investor. Graham is considered the first proponent of value investing, an investment approach he began teaching at Columbia Business School in 1928 and subsequently refined with David Dodd through various editions of their famous book...

 and David Dodd
David Dodd
David LeFevre Dodd was an American educator, financial analyst, author, economist, professional investor, and in his student years, a of, and as a postgraduate, close colleague of Benjamin Graham at Columbia Business School.The Wall Street Crash of 1929 almost wiped out Graham, who had started...

. After that debacle, Rainwater sought advice on more qualitative investing and his investments began to take off, according to "Wall Street's Best-kept Secret," a cover story that appeared in the October 20, 1986 issue of Business Week. Rainwater eventually transformed the Bass family fortune into $5 billion. He is reported to have amassed $100 million for himself during that period, which he later used as seed money for his own fund.

Rainwater has been an independent investor since 1986, investing in more than 30 companies and purchasing 15000000 square feet (1,393,545.6 m²) of office space in Texas. Fortune magazine described his investing style as "analytically rigorous but opportunistic and Texas-sized in its audacity."

He founded or co-founded firms including ENSCO International
ENSCO International
Ensco plc is a multinational oil and gas services company headquartered in London, United Kingdom. It is the world's second-largest offshore oil and gas well drilling company, and has 49 offshore jack-ups, seven drillships and 20 semi-submersible drilling rigs servicing domestic US, international,...

, an oil field service and offshore drilling
Offshore drilling
Offshore drilling refers to a mechanical process where a wellbore is drilled through the seabed. It is typically carried out in order to explore for and subsequently produce hydrocarbons which lie in rock formations beneath the seabed...

 company, in 1986; Columbia Hospital Corporation in 1988; Mid Ocean Limited, a provider of casualty re-insurance, in 1992; and Crescent Real Estate Equities, Inc. in 1994. He has been called a "capitalist cowboy for the '90s, leading the way into new frontiers of finance."

Betting on peak oil


Beginning in the late 1990s, when petroleum prices
Price of petroleum
The price of petroleum as quoted in news generally refers to the spot price per barrel of either WTI/light crude as traded on the New York Mercantile Exchange for delivery at Cushing, Oklahoma, or of Brent as traded on the Intercontinental Exchange for delivery at Sullom Voe.The price...

 were near historic inflation-adjusted lows
1980s oil glut
The 1980s oil glut was a serious surplus of crude oil caused by falling demand following the 1970s Energy Crisis. The world price of oil, which had peaked in 1980 at over US$35 per barrel , fell in 1986 from $27 to below $10...

, Rainwater began taking long positions
Long (finance)
In finance, a long position in a security, such as a stock or a bond, or equivalently to be long in a security, means the holder of the position owns the security and will profit if the price of the security goes up. Going long is the more conventional practice of investing and is contrasted with...

 on petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

 futures
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...

. He was influenced by reading Beyond the Limits
Beyond the Limits
Beyond the Limits is a 1992 book continuing the modeling of the consequences of a rapidly growing global population that was started in Limits to Growth. Donella Meadows, Dennis Meadows, and Jorgen Randers are the authors and all were involved in the original Club of Rome study as well...

, the sequel to Limits to Growth
Limits to Growth
The Limits to Growth is a 1972 book modeling the consequences of a rapidly growing world population and finite resource supplies, commissioned by the Club of Rome. Its authors were Donella H. Meadows, Dennis L. Meadows, Jørgen Randers, and William W. Behrens III. The book used the World3 model to...

. Over the following years, Rainwater read further about peak oil
Peak oil
Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. This concept is based on the observed production rates of individual oil wells, projected reserves and the combined production rate of a field...

, including books such as The Long Emergency
The Long Emergency
The Long Emergency: Surviving the Converging Catastrophes of the Twenty-first Century is a book by James Howard Kunstler exploring the consequences of a world oil production peak, coinciding with the forces of climate change, resurgent diseases, water scarcity, global economic instability and...

by James Kunstler
James Howard Kunstler
James Howard Kunstler is an American author, social critic, public speaker, and blogger. He is best known for his books The Geography of Nowhere , a history of American suburbia and urban development, and the more recent The Long Emergency , where he argues that declining oil production is likely...

 and online discussions. Rainwater took positions in financial markets that effectively amounted to betting with peakniks and malthusians against cornucopian
Cornucopian
A cornucopian is a futurist who believes that continued progress and provision of material items for mankind can be met by similarly continued advances in technology...

s, somewhat like a reprise of the famous Simon–Ehrlich wager, except on a much larger scale. The oil price increases since 2003 have made these bets pay off handsomely for Rainwater.

While remaining guardedly optimistic against the worst-case scenario predictions of doomer
Doomer
A Doomer is one who has peak oil related concerns that price shocks spawned by oil depletion will contribute to a severe economic recession or another Great Depression). Doomers attribute their beliefs to humanity's over reliance on petroleum for agricultural and industrial productivity. Many...

s, Rainwater sees the peak oil phenomenon as a grave threat and seeks to call attention to it.

Personal life


With an estimated net worth of around $2.3 billion, He is ranked by Forbes
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...

as the 171st richest person in the United States and the 512th richest person in the world. He is married to financier Darla Moore
Darla Moore
Darla Dee Moore is a partner of the private investment firm Rainwater, Inc, and is married to Richard Rainwater, who founded the firm....

.

External links