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2. Carl Icahn

Earned: $2.5 Billion
Firm: Icahn Capital Management
AUM: $7 Billion

While more than half of all hedge funds were in the red, the 76-year-old one-time corporate raider racked up a 34.5 percent gross return. Even more impressive, Icahn accomplished these returns without the benefit of investment fees. Icahn returned all money to outside investors in April 2011, in order to avoid a repeat of 2008, when short-sighted investors clamored for funds to be returned.

Icahn generated nearly half of his gains in the fourth-quarter, led by natural gas company El Paso (EP), which agreed to be acquired by Kinder Morgan (KMI) some three months after Icahn began building his position.

His other big winners: biotech company Biogen Idec (BIIB), communications companies Motorola Mobility Holdings (MMI) and Motorola Solutions (MSI), and Chesapeake Energy (CHK).

Photo: Scott Eells | Bloomberg | Getty Images