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Eight Hedge Fund Managers Earned More Than $1 Billion Each in 2019. Cue the Questions.
The 19th annual Rich List
From the Mar 2020 The Rich List 2020
What a difference a pandemic makes. Sitting where we are today, it’s mind-boggling to believe that just a scant three months ago, hedge funds completed their best year in recent memory — which, as revealed here, brought with it some monumental earnings for the men who run them.
As a result of their annual returns, the 25 highest-earning hedge fund managers made a combined $20.2 billion in 2019. This is the most since calendar year 2013.
This works out to an average of $808 million for each of the top 25. The median earner — Trian Partners’ Peter May — earned $645 million.
Simply to qualify for the First Team requires one to have earned $230 million.
Altogether, eight of the top-25 earners each made more than $1 billion last year. And those eight weren’t concentrated in just one or two investing strategies: Long-only investors, activists, quants, and multistrategy legends all participated in the industry’s banner year.
Of course, given the current cataclysm in global markets — and for the people who underpin them — much of this wealth will likely have been destroyed in the three months since 2019 ended. Nevertheless, this list is certain to spark debate, criticism, and questions. We welcome all three — and encourage you to discuss it on Twitter and LinkedIn.
For the full First Team, click here.
For the Second Team, click here.
1 Christopher Hohn, James Simons (tie)
The Rich List has a new co-leader in Chris Hohn — the founder of London-based TCI — on the back of a 40.6 percent return in 2019, the firm’s best year in six years. Hohn’s mostly long-only special-situations strategy frequently takes activist positions, scoring big on Charter Communications and Airbus in 2019. Last March, TCI offered all investors the opportunity to redeem up to 5 percent of their investments to help balance their portfolios. He received few takers.
Quant legend and onetime defense codebreaker Jim Simons is the only person to qualify for the Rich List in all 19 years. Last year, Renaissance Institutional Equities Fund rose about 13.5 percent, and Renaissance Institutional Diversified Alpha was up 4.2 percent. Renaissance Technologies’ flagship fund, Medallion — closed to outsiders for years — has generated an annualized return of 39.1 percent, net of its hefty fees, since inception.
3 Ken Griffin, Izzy Englander (tie)
Ken Griffin’s multistrategy Wellington fund rose 19.3 percent last year, its best annual result in at least the past six years. Gains were driven by all five of the fund’s main strategies: equities, fixed-income and macro, commodities, credit, and quantitative. Citadel Tactical Trading, an equities-oriented multistrategy fund, was up more than 20 percent. In November, Citadel announced that Griffin, the founder and CEO, will now split the CIO job with James Yeh, who became president effective January 1. Griffin has qualified for the Rich List in 18 of its 19 years.
Multistrategy legend Izzy Englander posted a 9.4 percent gain last year, qualifying for the Rich List in 18 of its 19 years. Last year, Millennium Management — launched in 1989 — raised $3.7 billion for a new five-year share class of its flagship hedge fund. The firm returned all of its 2018 profits to existing investors, but invited all of them to invest the proceeds in the new share class. It managed $40.76 billion as of March 1, 2020.
5 Chase Coleman
Tiger Cub/seed Chase Coleman has emerged as one of the elite managers of his generation. Last year his tech/internet/media-driven long-short funds, Tiger Global Investments, surged 33 percent; Tiger Global Long Opportunities, the long-only fund, returned roughly 30 percent. Tiger Global Management — which includes Scott Shleifer, No. 14 on this year’s Rich List — also raised $2 billion for its new drawdown fund in 2019. At the beginning of the year, the firm managed a total of $36 billion firmwide, more than half managed by its private business — which doesn’t count toward the Rich List calculations — and recently raised $3.75 billion for its 12th private equity fund.
6 Steven Cohen, David Tepper (tie)
Steve Cohen’s Point72 generated a 14.9 percent gain in part thanks to his investment in No. 19 Gabriel Plotkin’s Melvin Capital, which was up more than 46 percent. Point72, which ran $16.1 billion as of January 1, has been managing money for outside investors for more than two years. Regulators banned Cohen’s previous firm, SAC Capital, from managing outside clients’ money for five years when it agreed to plead guilty to insider trading violations in November 2013.
These days football is more likely to thrust David Tepper into the spotlight than investing. In 2019, Appaloosa Management’s main fund was up just 13 percent, roughly half its annualized return. Late in the year, Tepper said he would return capital to most of his clients, retaining just 15 key investors who have a combined $1.25 billion to $1.5 billion invested with Appaloosa. Earlier this year, Tepper freaked out the football world when his Carolina Panthers signed former Baylor head coach Matt Rhule as its new coach — for at least $60 million over seven years.
8 Ray Dalio
Bridgewater Associates, the world’s largest hedge fund firm, posted roughly flat results in its Pure Alpha strategy in 2019, with Pure Alpha 18 Percent — the more leveraged version — falling 0.5 percent for the year. The firm’s All Weather risk parity strategy returned 16 percent. Nevertheless, Ray Dalio’s personal gains were helped by the firm’s hefty fees on more than $160 billion in assets. Late last year, Bridgewater announced that co-CEO Eileen Murray would leave at the end of the first quarter of 2020. Co-CEO David McCormick will serve as CEO.
9 Stephen Mandel Jr.
Lone Pine Capital’s funds did not miss a beat — even though 2019 was the first year Tiger Cub Steve Mandel Jr. no longer ran them on a day-to-day basis. Lone Cypress, the long-short fund, was up 36 percent, and long-only fund Lone Cascade gained 37 percent. Last year, Lone Pine lost much less on its shorts than most other hedge funds. The firm’s funds are now run on a daily basis by David Craver, Mala Gaonkar, and Kelly Granat.
10 Nelson Peltz
Nelson Peltz’s Trian Partners was one of the top-performing activists last year, returning more than 30 percent. It was led by its largest position — consumer goods giant Procter & Gamble — which accounted for 42 percent of U.S. assets at year-end. In 2019 the stock surged by more than 32 percent. Additionally, food wholesaler Sysco, the firm’s second-largest position, rose more than 35 percent. Peltz is joined on this year’s Rich List by co-founder Peter May, who sits at No. 13, and Edward Garden, at No. 15.
Each year, II determines the 25 hedge fund managers who personally earned the most money in a single year; in certain years, depending on returns, II also fields a Second Team, consisting of the 25 next-highest earners.
To calculate earnings we count gains on managers’ own capital invested in their funds, as well as shares of the firms’ total fees. When calculating the returns generated by managers’ own money, we do not take into consideration a high-water mark. In many cases, the gains on their capital play a major role in the ability of managers to qualify for the ranking.
For the full First Team, click here.
For the Second Team, click here.