Dan Loeb Joins the List of the Best Hedge Fund Managers of All Time

Last week Dan Loeb, the founder of hedge fund Third Point, took to Twitter to post an existential thought: “We are born alone; we die alone; and, we face bear markets alone.”

But whatever worries he may have about 2022’s dreary markets, there is one place Loeb is not alone: He just made an annual list of “the world’s greatest money managers” for the first time ever. Loeb comes in at number 20, the bottom of the list, which is compiled annually by Rick Sopher, chairman of LCH Investments in London. It calculates how much money investors took home from the hedge funds both during the past year and since they opened their funds.

Loeb made $3.3 billion for his investors last year and has made $18.8 billion since launching his hedge fund in 1995, according to the just-released report. The hedge fund firm has $16.5 billion in assets, lower than all others on the list except for King Street, which has $11.5 billion and came in nineteenth.

Sopher attributed the gains to Third Point’s “opportunistic and flexible approach, combined with some spectacular successes with small private investments that recently went public.”

Other newcomers to the list are three portfolio managers at Davidson Kempner: Marvin Davidson, Thomas Kempner, and Anthony Yoseloff. That firm comes in at number 18, having made $2.4 billion for investors in 2021 and $19.6 billion since its hedge fund’s in 1983. It now has $29.5 billion under management. Davidson Kempner has “successfully exploited asset-driven and credit opportunities over the long term,” Sopher said in a release accompanying his rankings.

But the top of the list didn’t change that much. Not surprisingly, the big dollar gains are usually made by funds running the most assets.

The all-time number one is still Ray Dalio’s Bridgewater Associates, with total gains of $52.2 billion since 1975. But Bridgewater’s returns in 2021 were only $5.7 billion (on assets under management of $99.2 billion) — lower than five other managers last year.

Last year’s top gains were made by Chris Hohn’s $44.4 billion TCI Fund Management, which earned $9.5 billion for investors, boosting its total earnings to $36.5 billion since inception.  “This is not a surprise as the manager’s strategy of holding equities on a concentrated basis, with a heavy net long bias, was well adapted to market conditions,” Sopher said. 

Hohn jumped in the rankings as a result, rising to ninth from thirteenth the prior year.

The most profitable strategy on the list was multi strategy, with Citadel, D.E. Shaw, and Millennium making the biggest gains, Sopher added. They generated $21 billion in net gains out of the $65.4 billion made by the top 20 managers.

Ken Griffin’s Citadel made $8.2 billion for investors despite being drawn into the drama surrounding GameStop. This allowed Griffiin to jump from fourth to second place in the all-time ranking, with earnings of $50 billion since the hedge fund’s launch in 1990. Citadel now has $43.7 billion under management.

The next biggest winners last year were D.E. Shaw and Izzy Englander’s Millennium, which both made $6.4 billion for investors in 2021. The $38 billion D.E. Shaw jumped from fifth to fourth place in the all-time ranking, with total gains of $43.7 billion for investors since its launch in 1988.

Millennium, with $52 billion under management, jumped to fifth place with $42.2 billion in net gains since its 1989 inception.

Long/short managers fared worse last year, Sopher said, attributing this to a difficult environment for short selling and “low net exposure” to equity markets.

One of the biggest losers in the ranking for last year was Steve Mandel’s $31 billion Lone Pine, which which was flat last year. Still, Mandel is number six in the all-time ranking — down from third place — with $42.2 billion in net gains since the hedge fund was launched.

Other losers included David Tepper’s Appaloosa, which fell to thirteenth from twelfth, having made only $2.1 billion for investors in 2021. Another was Chase Coleman’s Tiger Global, which fell two notches, to sixteenth place, after losing $1.5 billion. Coleman was the only one of the top 20 managers who lost money last year.

Since these 20 managers started their firms, they’ve collectively earned investors $677 billion. They accounted for almost 20 percent of all money managed by hedge funds at the end of 2021, with an average return on assets of about 10.5 percent last year, Sopher said.