A tough year in the financial markets didn't keep a gilt-edged group of hedge fund managers from raking in big bucks in 2015, with five men each earning more than a billion dollars, according to an annual ranking out this week.
The two at the top of the list[1], compiled by Institutional Investor's Alpha magazine, took in $1.7 billion each last year, which amounts to nearly $4.7 million per day. Average annual earnings for the top 25 hedge fund managers was $517.6 million. Together those 25 money managers earned $12.9 billion.
Roughly half of the highest-earning hedge fund managers used computers to devise strategies behind some or all of their investment gains, according to Alpha.
Renaissance Technologies founder James Simons and Citadel's Kenneth Griffin tied for the top spot on the rich list, each making $1.7 billion last year after tallying midteen investment returns in their major funds, the magazine said.
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Raymond Dalio of Bridgewater Associates and David Tepper at Appaloosa shared the third slot, each making $1.4 billion. Millennium Management founder Israel Englander placed fifth with earnings of $1.15 billion, while David Shaw of D.E. Shaw Group landed in the sixth slot by earning $750 million.
Rounding out the top 10: John Overdeck and David Siegel of Two Sigma Investments, both of whom took in $500 million; O. Andreas Halvorsen of Viking Global Investors ($370 million); and Christopher Hohn of the U.K.'s Children's Investment Fund Management and Joseph Edelman of Perceptive Advisors ($300 million each).
About half of all hedge funds lost money last year, with Daniel Loeb, the activist investor who runs the hedge fund Third Point, among those whose fund finished 2015 in the red and missing out on Alpha's list as a result.
In a letter to investors in April, Loeb said the industry was enduring one of its "most catastrophic periods,"[2] continuing in a negative vein that had him describing the situation as a "Wall Street recession"[3] in his investor letter from February.
But losing money did not keep all hedge fund managers off Alpha's top 25 list, with five managers making the grade even though at least one of their funds declined last year, the magazine said.
It is a disgrace that the top 25 hedge managers made more than all the nation's kindergarten teachers combined. https://t.co/Q0BMvQnNNx[4]
— Bernie Sanders (@SenSanders) May 10, 2016[5]
The titans of the hedge fund industry massively outdid their counterparts in banking, with JPMorgan Chase (JPM[6]) CEO Jamie Dimon making a comparatively meager $25 million in 2015, and Goldman Sachs (GS) chief Lloyd Blankfein earning $23 million.
Hedge funds are subject to far less regulation than banks, which have had to change some of their practices due to legislation that followed the financial meltdown in 2008. And, while efforts to reform banks deemed too big to fail have led some to scale back[7], the hedge fund industry has only gotten bigger.
Critics of the industry include presidential candidates Bernie Sanders and Donald Trump, with the latter having said the tax system allows the hedge fund guys to get "away with murder,"[8] a statement at odds with his published tax plan, which would give them an even larger break[9].
References
- ^ list (www.institutionalinvestorsalpha.com)
- ^ "most catastrophic periods," (www.businessinsider.sg)
- ^ "Wall Street recession" (www.businessinsider.com)
- ^ https://t.co/Q0BMvQnNNx (t.co)
- ^ May 10, 2016 (twitter.com)
- ^ JPM (markets.cbsnews.com)
- ^ scale back (www.newyorker.com)
- ^ "away with murder," (www.bloomberg.com)
- ^ even larger break (finance.yahoo.com)
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