Top earning hedge fund managers 2012
Average hedge fund fell by 5% even as the U.S. stock market eked out a tiny gain. Big shot investors like billionaire John Paulson were humbled and lost massive amounts of money. Yet even in a down year, arguably its worst ever, the hedge fund industry demonstrated its unmatched ability to make people rich. No hedge fund titan made more in 2011 than Raymond Dalio. The founder of Bridgewater Associates, the world’s biggest hedge fund firm, made an estimated $3 billion in 2011 as his funds produced net returns in the 20% range. As a result, Dalio tops Forbes’ list of the 40 highest-earning hedge fund managers of 2011. With $120 billion under management, Bridgewater has become a fee-generating machine, rewarding the man who founded it in 1975 in his Manhattan apartment. Dalio’s methods are controversial and include videotaping meetings and encouraging brutal honesty among his staff, but they have proven particularly effective during the recent years of market turmoil and volatility. Dalio profited in 2011 by investing in U.S. and German government bonds, as well as U.S. Treasury inflation-protected securities. Bridgewater is now such a gold mine that the firm itself has become an attractive investment and Dalio, 62, has recently been selling stakes in the firm to his clients.
Dalio, however, was not the only hedge fund mogul who had a very good year in 2011. Two other money men made $2 billion each. In total, the top 40 highest-earning hedge fund managers made a combined $13.2 billion, with the lowest earning managers on our list making $40 million. To qualify for the top 10, a hedge fund manager needed to make more than $200 million. This is what a very bad year in the hedge fund business looks like.
James Simons, the 73-year-old mathematical genius who founded Renaissance Technologies, earned $2.1 billion. Simons retired from the position of chief executive at his $20 billion hedge fund firm in 2010, but he continues to play a role at Renaissance and remains heavily invested in its funds, enjoying the proceeds of good years. In 2011, the firm’s funds earned net returns as high as 33%. Renaissance’s two co-chief executives, Peter Brown and Robert Mercer, also benefitted from the firm’s 2011 success, each earning some $125 million.
Carl Icahn has been shaking up markets for more than 30 years, but 2011 was a notable year even by his outsized standards. Now 76, Icahn returned his hedge fund’s outside money and decided to focus on investing his own funds. Icahn produced returns of 35% and earned $2 billion thanks to successful bets on companies like Motorola Mobility and El Paso. He has been enjoying a sizzling comeback since suffering a setback in 2008. “Over the last three years our average annualized returns have been 27.4%,” says Icahn. “I’m quite pleased about these returns especially in light of the fact that during most of this period we’ve been well hedged to guard against another downturn which I believe might be on the horizon.”