The average portfolio manager at a hedge fund firm with more than $4 billion under management is making $2.4 million, up 8 percent from last year, according to the 2015 Glocap Hedge Fund Compensation Report, distributed by Chicago-based industry tracker Hedge Fund Research. Of course, this is a rounding error for the principals of the firms who top Alpha’s annual Rich List ranking of the top-earning hedge fund managers. In general, hedge fund compensation grew by between 4 percent and 8 percent in 2014, depending upon the job title and the size of the firm, according to the study. This is based on salary and bonuses received by portfolio managers, hedge fund analysts, traders, CFOs, COOs and several other critical functions.
“Hedge fund bonus pools continue to grow in 2014, inflated by management fee income, even if the performance contributions are more variable,” says Anthony Keizner, head of the hedge fund practice at Glocap, an investment management executive search firm, in a press release. “But hedge funds will again be increasing their pay to retain and attract top talent, especially as more capital enters this competitive market.”
Analysts at large funds that posted returns more or less in line with the industry earned $372,000, up 5.4 percent from the previous year. This is the result of a 6 percent increase in base salary and 5 percent increase in the bonus. In general, portfolio managers and other senior investment professionals at large funds earned an average base salary of $275,000, an amount that experienced less change. Their bonuses rose between 2 percent and 15 percent.
Fund performance is the “primary determinant” of compensation, the report states. However, compensation models also consider “an increasingly broad and complex continuum of qualities, designed to reflect increased teamwork, risk-based capital returns, firm promotion, extending duration of incentives and scrutiny from both regulators and investors of compensation practices,” it adds.
Jana Partners’ Barry Rosenstein fired off a letter to the board of directors of Hertz Global Holdings, urging the car rental company to hire former Dollar Thrifty CEO Scott Thompson to fill the open position of chief executive officer. In September, Mark Frissora resigned as CEO of Hertz, which acquired Dollar Thrifty two years ago.
“We believe that the board may have reservations about Mr. Thompson given that the Dollar Thrifty transaction was largely perceived as a significant victory for Dollar Thrifty shareholders which came at the expense of Hertz,” Rosenstein states in the letter. “We fail to see, however, how Mr. Thompson’s determined and successful efforts to deliver maximum value for his shareholders at Dollar Thrifty can be seen as anything other than an overwhelming positive; this quality is in fact exactly what Hertz shareholders want in a new CEO.”
New York-based Jana also said it sold 16,444 shares of Hertz on October 22, reducing its stake to about 7 percent.
Alan Howard’s BH Macro fund, which invests substantially all of its assets in the Brevan Howard Master Fund, posted a 1.74 percent loss in October. As a result, the fund, managed by London-based Brevan Howard Asset Management, is down 0.85 percent for the year. The fund has never posted a loss since its 2007 inception.
Kenneth Griffin’s Citadel disclosed that it owns 5.1 percent of JAKKS Pacific, which markets toys and consumer products. The Chicago-based hedge fund firm also disclosed tht it owns 6.4 percent of Rosetta Resources, an independent exploration and production company. Both filings indicated the investments are passive.
Fir Tree Partners, founded by Jeffrey Tannenbaum, disclosed it owns 14 percent of CDK Global, a provider of technology and marketing services to auto retailers that was spun-off from Automatic Data Processing in late September.
Shares of solar energy company SolarCity Corp. fell more than 5 percent after it reported a much narrower loss than expected but also lower revenues than were forecast. Analysts were also reportedly disappointed in its guidance. As a reported earlier this week, at the end of the third quarter, Daniel Benton’s Andor Capital lifted its stake in the solar panel installer by 23 percent, and it is now the firm’s sixth largest holding.