Hedge fund money flows to US candidates in 1st qtr

By Svea Herbst-Bayliss

BOSTON, June 1 (Reuters) - Managers at top hedge funds contributed $1.1 million to U.S. presidential candidates during the first three months of 2007, sending the bulk of their donations to Democrats, a monitoring group said on Friday.

Managers at Fortress Investment Group (FIG.N: Quote, Profile, Research, Stock Buzz), SAC Capital Advisors, Farallon Capital Management and other funds wrote checks worth thousands of dollars to front-runners like Democratic candidate Sen. Hillary Rodham Clinton and Rudolph Giuliani, a Republican.

But they donated most generously to Connecticut Democratic Sen. Christopher Dodd, the Center for Responsive Politics found. Dodd, whose state is home to many of the world's biggest hedge funds and who also chairs the U.S. Senate Banking Committee, received $347,300 in the first quarter.

John Edwards, the Democratic vice-presidential candidate in 2004, followed in second place with $190,650 raised, ahead of Clinton with $164,600.

Hedge fund industry magazine AbsoluteReturn asked the center to compile the data.

While the hedge funds' $1.1 million makes up only a fraction of the roughly $130 million that candidates raised in the first quarter, the number suggests that managers in the $1.5 trillion industry are becoming more politically active.

"One reason that donations are increasing is that the industry is growing," said Massie Ritsch, a spokesman for the Center for Responsive Politics. "It is a largely unregulated and not very well understood industry and many in the industry would like to keep it that way, so this might be seen as a defensive move," he said.

For the first time ever, a hedge fund -- Fortress Investments -- ranks among the top 10 donors in the securities and investment industry, Ritsch said. Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz), Citigroup (C.N: Quote, Profile, Research, Stock Buzz), Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) and other investment banks and brokerages have long dominated that list.