Times may be tough for most folks, but not for the top moneymakers on "Alpha" magazine's eighth annual ranking of the world's highest-earning hedge fund managers. They took home, on average, an anything but average $464 million apiece in 2008. Altogether the 25 highest-earning hedge fund managers made $11.6 billion, making 2008 the third-best year on record since "Alpha" began compiling its exclusive ranking.
Renowned quantitative investor James Simons, 70, the founder of East Setauket, New York-based Renaissance Technologies Corp., earns the No. 1 spot by making an incredible $2.5 billion in 2008. Simons, a former Stony Brook University math professor who took top honors in the 2006 and 2007 rankings, reclaims the crown of highest earner from fellow billionaire John Paulson. The founder of New York-based Paulson & Co. -- who made a record $3.7 billion in 2007 betting against the subprime mortgage market -- Paulson, 53, saw his earnings drop to a still kingly sum of $2 billion last year. He is followed by wunderkind John Arnold, the 34-year-old founder of Houston-based Centaurus Energy, who made $1.5 billion last year trading mostly natural gas, and legendary hedge fund manager George Soros, 78, who earned $1.1 billion in part from a good call against the dollar.
All but Arnold are repeat top-four finishers in "Alpha's" annual ranking, which is being rolled out today at www.Alphamagazine.com with profiles of the 11 biggest moneymakers. The remaining 14 profiles will be available online on Thursday, March 26, along with "Alpha's" list of eight of the biggest losers -- managers who lost a combined $6.2 billion in personal wealth in 2008.
"The hedge fund industry has a well-deserved reputation for enormous wealth creation," says Michael Peltz, Executive Editor of "Alpha." "But events of the past year have been a grim reminder that the hedge fund industry can also be a source of incredible wealth destruction."
This year's "Alpha" ranking has a record nine European managers, including London-based David Harding of Winton Capital Management and Alan Howard of Brevan Howard Asset Management, who each made $250 million in 2008. Short-seller James Chanos of Kynikos Associates, No. 12, with $225 million in earnings, is one of a dozen managers who appear on the ranking for the very first time. "Alpha" uses two components to calculate earnings: the managers' shares of their firm's performance and management fees, as well as gains on their own capital invested in their funds.
Rank: 1
James Simons
Renaissance Technologies
Est. 2008 earnings: $2.5 billion
Est. 2007 earnings: $2.8 billion
Rank: 2
John Paulson
Paulson & Company
Est. 2008 earnings: $2 billion
Est. 2007 earnings: $3.7 billion
Rank: 3
John D. Arnold
Centaurus Energy
Est. 2008 earnings: $1.5 billion
Est. 2007 earnings: $480 million
Rank: 4
George Soros
Soros Fund Management
Est. 2008 earnings: $1.1 billion
Est. 2007 earnings: $2.9 billion
Rank: 5
Ray Dalio
Bridgewater Associates
Est. 2008 earnings: $780 million
Est. 2007 earnings: $400 million
Rank: 6
Bruce Kovner
Caxton Associates
Est. 2008 earnings: $640 million
Est. 2007 earnings: $100 million
Rank: 7
David Shaw
D.E. Shaw & Company
Est. 2008 earnings: $275 million
Est. 2007 earnings: $210 million
Rank: 8
Stanley Druckenmiller
Duquesne Capital Management
Est. 2008 earnings: $260 million
Est. 2007 earnings: Not available
Rank: 9 (tie)
David Harding
Winton Capital Management
Est. 2008 earnings: $250 million
Est. 2007 earnings: $225 million
Rank: 9 (tie)
John Taylor Jr.
FX Concepts
Est. 2008 earnings: $250 million
Est. 2007 earnings: Not available
Rank: 9 (tie)
Alan Howard
Brevan Howard Asset Management
Est. 2008 earnings: $250 million
Est. 2007 earnings: $245 million
This year's top-earning managers are probably hoping that history doesn't repeat itself. In November 2008 the five managers who headlined the "Alpha" list of top earners for 2007 -- Paulson, Soros and Simons, as well as Harbinger Capital Partners' Philip Falcone and Citadel Investment Group's Kenneth Griffin (the latter two are both off the list this year) -- were called to Washington to testify before the House Committee on Oversight and Government Reform on the systemic risks posed by hedge funds.
More coverage of Alpha Magazine's Research at:
New York Times , Sys-Con Media, Financial Times
