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Delivering Alpha

A look at 5 hedge fund stars of the future

Joshua Birnbaum
Joshua Roberts | Bloomberg | Getty Images

They bet right on subprime, poached high-profile talent and helped shore up AOL when it looked like the company was sliding into the abyss.

And while you might not know their names now, you will soon.

They are the five hedge fund stars of the future as identified by Institutional Investor, which is joining CNBC to present the fourth Delivering Alpha conference Wednesday. While the gathering will focus on established stars like Leon Cooperman, Carl Icahn and John Paulson, there's also plenty of attention to the big movers ahead.

As CNBC marks its 25th anniversary and looks to gauge what's ahead, Institutional Investor profiled the five names to watch (Get the full report here):

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1. Josh Birnbaum. The Tilden Park Capital Management co-founder and CIO saw trouble brewing in the subprime market in 2006 and made $3.7 billion for Goldman Sachs before the firm got cold feet on the trade. Since then, Birnbaum, 41, has taken a $25 million initial investment and grown Tilden Park to a $2.3 billion enterprise that has delivered stellar results, which included being on the right side of the trade that harpooned JPMorgan Chase's "London Whale," Bruno Iksil, who cost the bank $6.2 billion in losses.

2. Nehal Chopra. The 34-year-old Ratan Capital Management.chief runs a $750 million fund that she started with $25 million in seed money from hedge fund titan Julian Robertson Jr. Chopra made a very smart bet a few years back that Valeant Pharmaceuticals was on the cusp of being a great company that needed some fixing. Valeant ultimately exploded from a $2 billion market cap to a $42 billion market cap and is in the midst of a highly publicized effort to take over competitor Allergan. For her part, Chopra keeps a long-term investing frame that requires only a small staff at Ratan, but she seems destined to make a big mark.

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3. Deepak Gulati. The head of Switzerland-based Argentiere Capital boasts a former White House chief of staff—William Daley—in his stable but has done more than that. Gulati holds a strong pedigree from his days at JPMorgan and has outdone some of his Wall Street cohorts who struck out on their own after the Volcker Rule effectively shut down proprietary trading desks at major institutions. Running a complex strategy that seeks to do well when the market struggles, the 36-year-old Gulati faces skeptics in his approach to trading on volatility in such a complacent environment, but so far, so good.

4. Greg Lippmann. Another of the Wall Street stars who saw subprime disaster, Lippmann, 45, shorted the sector and made Deutsche Bank $2 billion, earning him a spot in Michael Lewis' famed book, "The Big Short." He, too, saw the limitations of staying at a big Street firm under new regulations and struck out on his own with the help of some friends and founded LibreMax Partners, which manages $3 billion that deals in the structured products market.

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5. Jeffrey Smith. In 2011, most everybody in the investment community had given up on AOL—except StarboardValue and Smith, who saw a company that simply wasn't leveraging its greatest assets. Smith pushed for AOL to capitalize on the myriad digital permits it held and to ditch losing parts of the business such as the Patch blog network that had been flaming out. While losing a proxy battle, the firm still reaped a 242 percent profit bonanza, and AOL continues to have life after selling its patent portfolio and, only later and reluctantly, Patch. For its part, Starboard continues to look for companies it can reform and generate profits.

—By CNBC staff