Hedge Funds have come under pressure in recent times. Firstly, they are almost always blamed when things go wrong in the financial world – take the Global Financial Crisis of 2008. What followed was more regulatory scrutiny. Then they found it difficult to make money like in their heydays before the crisis, which in turn has raised questions regarding their fee structure. Having traditionally applied the standard 2 and 20 model, i.e. a management fee of 2% of total asset value plus a performance fee of an additional 20% of any profits generated, many funds have been forced to live with less. However, things are not as dire as they may sound and there are plenty of Hedge Fund Managers that apparently make a decent living. Here is the list of the 10 richest Hedge Fund Managers in the world:
No. 10: Bruce Kovner
Which Hedge Fund? CAM Capital
What’s his (estimated) net worth? $5.7 billion
Who is he? Kovner started his investment career in the late 70s by borrowing three grand against his Mastercard to buy soybean future contracts. He established Caxton Associates, a global macro hedge fund, in 1983, and after his retirement in 2011, he set up CAM Capital the following year to manage his own investment, trading, and business activities.
No. 9: Kenneth Griffin
Which Hedge Fund? Citadel
What’s his (estimated) net worth? $6 billion
Who is he? Griffin is the founder and chief executive of the global investment firm Citadel, which combines three businesses in one: it’s alternative asset management business that has more than $25bn in assets under management; Citadel Technologies that offers investment management technology, which is developed internally at Citadel, to third party firms; and lastly Citadel Securities, which is one of the leading market makers in the world, trading products including equities, equity options, and interest rate swaps. Just to give you an idea, Citadel acts as principal to around $35 billion of equity trades a day.
No. 8: John Paulson
Which Hedge Fund? Paulson & Co
What’s his (estimated) net worth? $9.5 billion
Who is he? Paulson is famous for betting against subprime mortgages at the peak of the 2007 credit bubble and making billions from it. After that things have been so rosy though with a couple of bets on Greece and Puerto Rico that went sour and cut the assets under management from $36 bn in 2011 to a meagre $18 bn in 2013.
No. 7: David Tepper
Which Hedge Fund? Appaloosa Management
What’s his (estimated) net worth? $11 billion
Who is he? Tepper almost doubled his value last year by making more than $5bn. The son of an accountant and an elementary school teacher basically earned in 2016 close to six hundred grand – per hour!
No. 6: Stephan Schwarzman
Which Hedge Fund? The Blackstone Group
What’s his (estimated) net worth? $14 billion
Who is he? Schwarzman is the chairman and CEO of the private equity firm, The Blackstone Group, which he and former US Secretary of Commerce Pete Peterson established in 1985 that bought the Hilton Group in 2007. In February this year, Schwarzman became the chairman of President Donald Trump’s Strategic and Policy Forum.
No. 5: Steve Cohen
Which Hedge Fund? Point72 Asset Management
What’s his (estimated) net worth? $14 billion
Who is he? Cohen started SAC Capital in 1992 and by the end of the last decade the firm had $14bn under management. In 2012, the SEC charged the firm and Cohen for insider trading. This eventually led to the downfall of SAC Capital, but Cohen founded Point72 Asset Management as a family office that manages his assets. He made $4.2bn, which was only exceeded by David Tepper at No. 7 in terms of annual increase.
No. 4: James Simmons
Which Hedge Fund? Renaissance Technologies
What’s his (estimated) net worth? $15 billion
Who is he? Simons is the founder of Renaissance Technologies, one of the most successful quant traders. Its Medallion fund is, according to Bloomberg, famed for one of the best records in investing history, returning more than 35 percent annualized over a 20-year span. Simons ran Renaissance until 2009, when he stepped down, but he remains its non-executive chairman and adviser.
No. 3: Ray Dalio
Which Hedge Fund? Bridgewater Associates
What’s his (estimated) net worth? $15.9 billion
Who is he? Dalio is the founder of investment firm Bridgewater Associates, one of the world’s largest hedge funds, which is also known for its particular corporate culture that is guided by more than 200 principles that Dalio established in the mid-2000s. Called the”largest and indisputably weirdest hedge fund” by New York Magazine, it is a very profitable operation, making Dalio the 30th richest person in America.
No. 2: Carl Icahn
Which Hedge Fund? Icahn Enterprises
What’s his (estimated) net worth? $17 billion
Who is he? Icahn is often described as the prototype of a shareholder activist, using his influence in the companies he invests in to put pressure on corporate boards and demand changes that support his investment strategy. But Icahn is more than that. He made a fortune in the golden age of private equity in the 80s when he used junk bonds and similar instruments to gain control in companies he wanted to take over, like the hostile takeover of Trans World Airlines in 1985, which earned him the reputation of a corporate raider, a Gordon Gecko in real life. He’s never been shy of picking a fight. Dell, eBay and Apple are only some of the big corporations he challenged. Once again, he made the headlines earlier this year when he was appointed an advisor to President Trump to help him rescind what he calls excessive regulation.
No. 1: George Soros
Which Hedge Fund? Soros Fund Management
What’s his (estimated) net worth? $27 billion
Who is he? Soros is a living legend not only in the hedge fund industry. He “broke” the Bank of England in the early nineties by shorting the pound, which eventually forced the UK government to withdraw from the European Exchange Rate Mechanism and to devalue the pound. Soros made an estimated $1bn from that bet.
Ever since he has been very outspoken about his views and does not seem to mind on whose foot he might tread by doing so, with Theresa May and Donald Trump being the latest in a long list of people and institutions he has criticized heavily. Critics accuse him of using this as part of his investment strategy, but he has also been praised for his philanthropist initiatives either through his Open Society Foundation or sponsoring efforts like his recent backing of Climate March.
So, are you thinking about a career in Hedge Funds or do you want to know more about the industry? Then check out our related posts like our recent post on Hedge Fund Compliance.
This post is part of our series Banking and Finance for Compliance Professionals, which aims to inform Compliance Professionals (and whoever is interested) about aspects of financial services that go beyond the pure Compliance knowledge we try to build. It’s like Voltaire said “Every man is a creature of the age in which he lives and few are able to raise themselves above the ideas of the time.” So, in order to escape the boundaries of our situation, we need to be able to see the bigger picture and therefore understand the settings we operate in. We hope this helps!