Hedge Funds

Ackman's returns make him a top 20 fund manager

Billionaire activist investor Bill Ackman has been named one of the world's top 20 hedge fund managers for the first time, after posting stellar outperformance in 2014 led by his bet on botox maker Allergan.

Ackman broke into rankings, compiled by LCH Investments, at number 19, after his firm, Pershing Square, delivered $4.5 billion in net gains for investors last year. The figure brings the fund's lifetime gains to $11.6 billion since its launch in 2004.

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Pershing Square Capital Management CEO Bill Ackman speaks during an interview in New York.
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The list ranks the top 20 hedge funds according to the total amount of take-home profits they have made for investors after fees since their launch. At just 11 years old, the fund is the youngest on the list and Ackman – at age 48 - is the youngest manager featured in the top 20.

Pershing Square returned around 35 percent net of fees through early December, after his stake in Allergan made him around $2.6 billion. Rough CNBC calculations using these figures, his net worth and stake in Pershing Square Capital mean he likely took home at least $1 billion.

"Hedge fund returns were muted overall in 2014 and net gains for investors at $71 billion (from the wider hedge fund industry) were lower than in the two previous years," said Rick Sopher, chairman of LCH Investments, the world's oldest fund of hedge funds.

"However some of the more talented managers made exceptionally good investments which generated exceptionally strong gains for their investors."

Sopher, who is also head of alternative multi-management at exclusive private bank, Edmond de Rothschild, said Pershing Square's results were "outstanding" as "gains have mostly come from intelligent investing in liquid big cap U.S. stocks."

The top 20 managers made $25.2 billion net of fees for investors in 2014, outstripping the hedge fund performance averages by a considerable margin, according to LCH Investments.

Data compiled by Rick Sopher, chairman of LCH Investments NV

Veteran hedge fund George Soros, who announced at the World Economic Forum last week in Davos that he was stepping back from the running his own family fund, came in at number one.

His Quantum Endowment Fund, now managed by chief investment officer Scott Bessent, made gains of $2.3 billion last year, according to LCH Investments, but having posting gains of almost $42 billion since its launch in 1973, the fund retains the top spot.

John Paulson maintained third place in the rankings, but posted a loss of $1.9 billion in 2014, the greatest loss out of all 20 named managers.

David Tepper, who runs $20-billion distressed debt hedge fund Appaloosa Management, also stayed put in fifth place, with gains of $500 million in 2014.

Sopher, who compiled the data following contact with the managers themselves, analysis of audited and management reports, internal estimates and other confidential sources, said hedge funds remained an attractive option for investors, as interest rates remain at historic lows.

"Interest rates and prospective returns have come down in all the main asset classes. Hedge funds had net inflows of $136 billion in 2014, showing that investors continue to find the prospects of returns from hedge funds relatively attractive," he added.

By CNBC's Jenny Cosgrave; Lawrence Delevingne contributed to this report