Call it the
changing of the guard. In 2011, a year when a majority of
hedge fund managers lost money, 15 of the 25 managers who top
AR's annual ranking of the biggest
earners failed to make the previous years list. In fact,
eight individuals are making their debut on the 11-year-old
ranking, which first appeared in the pages
of Institutional Investor.
Sure, the top five earners are well-known names to readers
familiar with the Rich List: Bridgewater Associates'
Ray Dalio ($3.9 billion), Icahn Capital Managements Carl
Icahn ($2.5 billion), Renaissance Capitals James Simons
($2.1 billion), Citadels Kenneth Griffin ($700 million)
and SAC Capitals Steven Cohen ($585 million).
Yet all but five of the rest of the top earners are making
their debut or reappearing after a one- or two-year absence.
Managers such as Centaurus Energys John Arnold,
Bridgewaters Greg Jensen and Robert Prince, Tiger
Globals Chase Coleman, Viking Capitals O. Andreas
Halvorsen and ValueActs Jeff Ubben whose
strategies are all very different figure to become the
next fixtures in the top 25 ranking as their respective firms
continue to grow in size.
At the same time, a number of hedge fund managers who have
historically dominated the list have retired, including Soros
Fund Managements George Soros, his one-time sidekick
Stanley Druckenmiller of Duquesne Capital, Caxton Associates'
Bruce Kovner and Highbridge Capital Managements Henry
By providing a rare peek at the wealth earned by the
individuals who operate within this secretive universe, the
list documents the level of success they have achieved.
While the 25 highest earners made a combined $14.4 billion
last year, the lowest sum in three years, they earned more than
$136 billion from 2001 through 2011, an average of nearly $500
million per person per year, which includes their share of the
fees as well as gains on their considerable amount of capital
in the funds (not counting losing years).
As a result, hedge fund managers have become modern day
Rockefellers, Carnegies and Vanderbilts. And like their
predecessors, they have had a major influence on society in
everything from real estate to charities. Not only have they
helped drive up the value of luxury Manhattan apartments,
Fairfield, Connecticut homes, Hampton summer houses, many kinds
of art and even major league sports franchises, they have also
donated hundreds of millions of dollars to build wings of
hospitals and museums and to fund college programs, buildings
and sports arenas. They have shelled out billions of dollars to
help the poor and medically unfortunate, including those
suffering from Parkinsons disease and autism. Hedge funds
have also quietly funded scores of lesser-known charities.
Seven hedge fund managers who have appeared on the Rich
List have taken Bill Gates Giving Pledge to donate a
majority of their wealth.
Many Rich List regulars also are big givers to
political candidates and political action committees as well as
major fundraisers for individual candidates on both sides of
the political aisle.
The top earners list has also attracted the attention of
legislators on Capitol Hill. When five hedge fund managers were
called in 2008 to testify at hearings before the House
Committee on Oversight and Government Reform to discuss the
role of hedge funds in the 2008 financial crisis, the
individuals all happened to have topped the Rich
List the prior year, having earned more than $1 billion
apiece George Soros, Philip Falcone, Kenneth Griffin,
John Paulson and James Simons.
Perhaps most remarkably, hedge fund managers earned these
amounts during the hardest period to make money on Wall Street
in several generations from 2001 through 2011
when the Dow Industrials rose a total of just 13 percent, the
Nasdaq Composite climbed a mere 7 percent and the Standard
& Poors 500 lost nearly 5 percent. In three of the 11
years, the average hedge fund lost money, according to Hedge
After all, the era saw two recessions (including a major
financial crisis), the biggest terrorist attacks on U.S.
territory, two wars, the rise of the Chinese economy and the
near-collapse of the Euro.
Yet through it all several managers displayed remarkable
consistency. Although Renaissance Technologies James
Simons was the only one to qualify for the list all 11 years,
three others SAC Capitals Steven Cohen,
Citadels Kenneth Griffin and Millennium Managements
Israel Englander qualified ten times.
The decade has also seen the birth of new stars, like John
Paulson, who after toiling in virtual obscurity for more than a
decade earned $3.7 billion in 2007 betting against the subprime
housing market. Although huge losses last year prevented him
from qualifying for the Rich List, he is likely to return
to the ranking in the future.
At the same time, several other managers experienced
meteoric rises and falls. For example, Atticus Capitals
Timothy Barakett, the former Harvard hockey star who from 2005
through 2007 made about $1.6 billion, closed down his firm in
2009 after his main fund, Atticus Global lost 27 percent the
prior year and investors tripped over one another heading for
the exits. His one-time European whiz, David Slager, who made
nearly $1 billion from 2005 through 2007, earlier this year
closed down his small firm, Attara Capital, which had trouble
raising capital. And Harbinger Capitals Phil Falcone, who
gained widespread notoriety in 2007 when he made $1.7 billion
shorting the troubled housing market, has seen his assets under
management shrink by nearly 80 percent from its high after
suffering performance troubles and legal inquiries into various
Now the question is whether the eight newcomers to the
ranking will build their own multibillion-dollar fortunes or
flame out in a year or two.