But in 2010 returns declined about 23%, its third-straight year of losses, as the economy recovered and oil slumped. Though some of his calls were broadly correct, his timing wasn’t. Clarium’s assets fell and Thiel ended up converting the fund into a private investment vehicle for primarily himself.
“His principal failure was wanting to be proven right intellectually,” said Simon Kerr, publisher of industry newsletter Hedge Fund Insight. “It was a bit of hubris. His macroeconomic framework and concept were correct, but how it was affected in markets wasn’t.”
A German-born lawyer by training, Thiel backed into a career as an investor, drawn by the opportunities to identify and solve problems. While a student at Stanford University, he latched on to the ideas of professor Rene Girard, a philosopher who claimed that humans form their desires based on what others want. In other words, by copying one another.
Libertarian Leanings
That premise has influenced his investment targets -- consider the user behavior on Facebook -- and shaped his heterodox thinking. He co-founded PayPal in the belief that people needed a form of payment that was convenient, secure and protected from government whims. But his professed libertarian leanings have at times clashed with his actions, such as his embrace of President Donald Trump in 2016 and his co-founding of Palantir, which relies on government contracts for much of its revenue.
The company’s “software is mission critical to various U.S. agencies,” Morningstar Inc. analyst Mark Cash wrote in a note Monday. Palantir posted its first earnings report as a public company on Thursday and said it expects sales growth to slow next year.
Thiel has also poured money into moonshot projects seemingly ripped from sci-fi films. He co-founded the Seasteading Institute, a nonprofit promoting the creation of man-made floating islands that are politically autonomous, and donated to a foundation focused on extending human lifespan “by making 90 the new 50,” according to its website. Confirming his pessimism about the world’s future, he bought property in New Zealand, a favorite among doomsday escapists.
He also got back into finance, putting $100 million into Mithril Capital, an investment firm founded by a former Clarium employee that generated more headlines for its legal woes than its returns.
Not all of his forays have been intended to make money. Yet even those that aren’t reflect a distinctly Thielian form of philanthropy, advocating nonconformist solutions for, as he sees it, an innovation-starved world stifled by politics and the misguided elite. His Thiel Foundation sponsors a fellowship that grants $100,000 to a student on the condition that they skip or drop out of college to “to build new things.”
Facebook Stake
He was revealed to be the backer of Hulk Hogan’s successful invasion of privacy lawsuit against website Gawker in 2016. The jury awarded Hogan $140 million, bankrupting both the site and its founder, Nick Denton.
Even his most successful investment is one he never fully realized. At the time of Facebook’s 2012 initial public offering, Thiel’s pre-offering stake was 2.5% and valued at $1.7 billion. That holding would today be worth $12.3 billion had Thiel, a board member, not sold more than a third of it in the IPO. He offloaded most of the remainder later that year.