Seven
of the world's top hedge fund managers earned 10-figure paychecks and
one set a record for the highest-ever payout last year due to a stock
market rally that pushed returns to their highest levels in a decade.
Together, the industry's 25 best-paid managers collected a record $25.33
billion, more than double the amount they took home in 2008 when the
financial crisis left many prominent funds nursing heavy losses.
In 2007, the top 25 set a record by taking home $22.3 billion.
The annual ranking, featuring the heads of the some of the industry's
oldest and biggest hedge funds, was released by Institutional Investor's AR:
Absolute Return + Alpha on Thursday [April 1].
Analysts had expected the overall increase after the average hedge fund
gained 20% and investors began putting new money into the loosely
regulated $1.5 trillion industry in 2009.
Hedge fund managers typically earn management fees plus performance fees
that can be has high as 50%, helping cement conventional wisdom that it
can be extremely lucrative to run a hedge fund. Some funds delivered
dramatically better returns than the average which helped their managers
take home billions, again.
David Tepper's Appaloosa Management gained more than 130%
on his bet that certain bank shares would recover. Mr. Tepper earned a
$4 billion payout that toppled John Paulson as the industry's
record payout holder. Mr. Paulson's bet that housing prices would fall
earned him $3.7 billion in 2007.
Mr. Paulson, however, still made the list of top earners, ranking in
fourth position with a $2.3 billion paycheck. He followed philanthropist
George Soros whose $3.3 billion put him into the No. 2 spot and James
Simons who earned $2.5 billion to rank as No. 3. Mr. Simons, a
former mathematics professor announced his retirement from Renaissance
Technologies last year.
SAC Capital Advisors' Steven Cohen ranked as the fifth- highest
earner with $1.4 billion. He was followed by Icahn Capital's Carl
Icahn, ESL Investment's Edward Lampert, Citadel Investment Group's
Kenneth Griffin, Centaurus Advisors' John Arnold and Harbinger
Capital Partners' Philip Falcone.