AR Magazine - Absolute Return + Alpha has released “The Rich List,” its annual ranking of the top-earning hedge fund managers.
The highest-earning hedge fund managers earned a combined $14.4 billion in 2011, down from more than $22 billion in 2010, and the lowest sum in three years.
The managers at the very top of this year’s Rich List bucked the trend of the industry’s lackluster performance. Seven of the eight highest earners steered their respective hedge funds to double-digit gross returns — an impressive accomplishment given that the average hedge fund lost more than 2 percent last year, according to the Hedge-Fund Intelligence Composite Index.
The stated goal of AR Magazine is to bring transparency to the often secretive space of the hedge fund industry. Here are the five top earning hedge fund managers from the annual list.
By Lori Spechler & Gennine Kelly
Posted 30 March 2012
Earned: $585 Million
Firm: SAC Capital Advisors
AUM: $14 Billion
Although last year’s 8 percent net return by SAC’s flagship multi-strategy fund was among Cohen’s worst annual results (apart from its 19 percent loss in 2008), the fund’s gross return of 16 percent was easily among the best hedge fund performances of 2011.
The fund, which charges a whopping 50 percent performance fee, did especially well in discretionary long-short equity, earning most of its gains from the energy, retail and technology sectors. The firm is based in Stamford, Conn.
Earned: $700 Million
AUM: $11 billion
Citadel’s multi-strategy funds Kensington Global Strategies and Wellington — which account for the bulk of the Chicago-based firm's $11 billion in assets — netted gains of more than 20 percent in 2011, finally overcoming the 55 percent they lost in 2008. The fact that the funds are above the high-water mark means that Citadel can start charging performance fees again.
Although Kensington and Wellington were profitable across all strategies, they were said to have done especially well in equities, energy and convertibles. Also, the Citadel Global Equities Fund was up more than 21 percent in 2011.
Earned: $2.1 Billion
Firm: Renaissance Technologies
AUM: $20 Billion
Last year, Renaissance Institutional Equities Fund (RIEF) surged about 34 percent. Those gains, along with the returns on the firm’s Medallion funds, enabled Simons to rake in more than $2 billion last year. The gains came mostly from returns on his own money — even though he retired in 2010.
The co-CEOs of Renaissance Technologies, which managed the fund, threatened to shut it down in 2009 after two years of disappointing losses. Simons serves as non-executive chairman of the East Setauket, N.Y.-based hedge fund firm.
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).
Earned: $3.9 Billion
Firm: Bridgewater Associates
Hedge Fund AUM: $70 billion
Total AUM: $120 billion
Bridgewater Associates founder Raymond Dalio tops this year’s list with a $3.9 billion payday for 2011. The Westport, Conn.-based Bridgewater is the largest hedge fund in the world, and in the past two years, the 63-year-old Dalio has earned $7 billion dollars.
According to reports, Bridgewater is betting on gold in 2012, figuring several countries will intentionally inflate their money supply to help reduce debt. The hedge fund is also looking for strength in emerging markets currencies, as well as lower yields in what it deems to be high-quality government bond markets.
Bridgewater has made about $50 billion for its investors since Dalio founded it in 1975 from his two-bedroom New York apartment.