Even in a brutal year, some top hedge fund
managers made out like bandits.
The top 40 highest-earning hedge fund managers took home a
combined $13.2 billion, according to a Forbes magazine survey. The top 10 hedge
fund managers made more than $200 million each, while the lowest earning
managers made $40 million each.
This came against the backdrop of one of the worst years
ever for the industry, with the average hedge fund falling 5 percent, even as
the U.S. stock market eked out a tiny gain.
Topping the charts was Raymond Dalio, who produced $13.8
billion for clients in 2011 while making returns in the 20 percent range. Dalio
oversees the world's biggest hedge fund firm, Bridgewater Associates, with $120
billion in assets. His earnings amounted to $3 billion.
But what may be most interesting is that some of the most
famous managers were beaten at their own game. Noticeably absent from the
Forbes list of the 40 highest-paid managers were John Paulson and Philip
Falcone, who both made billions betting against the subprime mortgage market.
James Simons of Renaissance Technologies was ranked behind
Dalio with $2.1 billion in earnings for the year. Simons, characterized by
Forbes as a 73-year-old "mathematical genius" who founded
Renaissance, reaped the rewards of investing his own funds in the firm. In
2011, the firm's funds earned net returns as high as 33 percent.
Simons' leap of faith also worked for Carl Icahn. Icahn
produced returns of 35 percent for his Icahn Capital Management and earned $2
billion thanks to successful bets on companies such as Motorola Mobility and El
Paso. He has enjoyed a sizzling comeback since suffering a setback in 2008.
For many managers on the list, it did not always take double-digit
gains to make hundreds of millions. Steve Cohen of SAC Capital Advisors was up
8 percent last year, but made $600 million, according to Forbes.
Cohen has been in the spotlight - yet again - because of
allegations of improper trading at his Stamford, Connecticut-based fund. A
technology analyst working for Cohen was arrested and charged with insider
trading last month.
Although SAC Capital has been hit by a fresh wave of legal
scrutiny, neither SAC nor Cohen have been accused of any wrongdoing.
Other managers on the Forbes list who finessed the volatile
markets included David Einhorn, Boaz Weinstein and John Thaler. Weinstein of
Saba Capital Management earned $90 million last year, while Einhorn of
Greenlight Capital made $80 million.
The highest-earning European hedge fund manager in 2011 was
Alan Howard, who recently moved to Geneva from London. A co-founder of Brevan
Howard Asset Management, Howard's $26 billion master fund led the way for the
firm in 2011, returning 12.14 percent net of fees. He earned $400 million last
Forbes said the $36 billion outfit has become
the destination of choice for high-profile employees fleeing investment banks
ahead of the imposition of the Volcker Rule, which cracks down on banks trading
with their own funds for profit. The firm, itself born when Howard and four
Credit Suisse First Boston colleagues went solo in 2011, intends to continue to
keep hiring so long as talent is available.
- 186 Financial Services, Insurance and Banking