The 2015 Rich List: The Highest Earning Hedge Fund Managers of the Past Year

May 05, 2015   Stephen Taub


Citadel founder Kenneth Griffin tops the Rich List in his 13th appearance on our ranking of the world's top earning hedge fund managers, unseating Appaloosa's David Tepper.

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Harsh memories of the global financial crisis pervaded Wall Street in 2014 — at least, for the highest-earning hedge fund managers. Last year turned out to be the worst one for this elite group of investors since the stock market meltdown of 2008.

How bad was it? The 25 hedge fund managers on our 14th annual Rich List made a paltry $11.62 billion combined, barely half of the $21.15 billion the top 25 gained the previous year and roughly equal to what they took home during nightmarish 2008. The average earnings were just $467 million last year, down from $846 million in 2013, while the median earner made $400 million, down from $465 million the previous year.

To qualify for this year’s Rich List, a manager needed to generate a mere $175 million for himself in 2014, down from $300 million the preceding year and the lowest minimum in three years. Yet many familiar names from Alpha’s annual ranking failed to qualify this year because they lost money in 2014. They include Discovery Capital Management’s Robert Citrone, Omega Advisors’ Leon Cooperman, Coatue Management’s Philippe Laffont, ESL Investments’ Edward Lampert and Paulson & Co.’s John Paulson. As a result, just 13 people who earned a spot this time were among the top 25 money makers the previous year.

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What’s more, at least 12 individuals on the list posted single-digit gains in their main fund or funds, underperforming the S&P 500’s 13.7 percent return for 2014. So it is not too surprising that five of the six highest earners are not strictly stock pickers but rather multistrategy managers with greatly varying strategies.

Kenneth Griffin, founder and CEO of Chicago-based Citadel, has made 13 appear­ances on the Rich List but this year tops it for the first time, earning $1.3 billion in fees and gains on his own capital. ( See methodology here.) The onetime hedge fund wunderkind, who is embroiled in an ugly divorce from his wife, Anne Dias Griffin, delivered strong performance in his firm’s multistrategy funds, Kensington and Wellington, which posted gains of 18.3 percent last year, driven largely by profits related to the equity markets.

The firms of the next two top earners rely on computers to make all or some of their decisions. James Simons, founder of East Setauket, New York–based Renaissance Technologies, is No. 2 with $1.2 billion in earnings. Simons, who no longer runs the firm on a day-to-day basis and spends a good chunk of the year on his 226-foot yacht Archimedes, is the only individual to in Rich List history who has qualified for the ranking all 14 years. Renaissance uses computers to trade a wide range of securities.

Simons is followed closely by Raymond Dalio, founder of Bridgewater Associates, who earned $1.1 billion in 2014. The Westport, Connecticut–based macro firm is known for trading in 199 different markets, using both computers and humans to make decisions. Co-CIOs Robert Prince and Greg Jensen make the Rich List for the second time, giving Bridgewater three representatives, the most of any firm.

Other top earners who rely heavily on computers to make investment decisions include David Shaw and David Harding. Shaw, founder of eponymous D.E. Shaw Group, earned $530 million even though he hasn’t run the New York–based firm on a daily basis in more than a decade. Harding, founder and CEO of London-based Winton Capital Management, is tied for No. 22 with $180 million in earnings.

Pershing Square Capital Management’s William Ackman, who ranks fourth with $950 million, is the only stock picker among the six highest earners. The New York activist, who runs a very concentrated portfolio, posted the highest gains among the managers on the Rich List: His funds were up between 36 and 40.4 percent, driven by gains from specialty pharmaceuticals company Allergan and to a lesser extent his high-profile bet against nutritional-supplement maker Herbalife and long positions in Canadian Pacific Railway, Restaurant Brands International and Air Products and Chemicals.

Appaloosa Management’s David Tepper relinquishes the top spot on the Rich List for the first time in three years after posting a disappointing 2.2 percent gain, the worst performance of anyone in the ranking. Still, the legendary investor — who has earned a total of nearly $15 billion in his 11 years on the list — is tied for No. 11 with $400 million in earnings thanks to the huge stockpile of his own cash in Appaloosa’s funds.

Tepper is the only one of last year’s three highest earners who even qualified for this year’s ranking. Paulson, who finished third on the 2013 ranking with $2.3 billion, lost money in most of his funds last year.

SAC Capital Advisors’ Steven Cohen, No. 2 last year with $2.4 billion, is no longer in the hedge fund business. He shut down his Stamford, Connecticut–based firm and returned all client money as part of SAC’s settlement of insider trading charges with government prosecutors. Cohen was personally never accused of a crime.

This year four individuals qualify for the Rich List for the first time: No. 15 Daniel Sundheim of Viking Global Investors, Feroz Dewan (16) of Tiger Global Management, Zachary Schreiber (17) of PointState Capital and Christopher Hohn (22) of The Children’s Investment Fund Management (U.K.).

 
Rank Name Firm Earnings
1 Kenneth Griffin Citadel $1.3 billion
2 James Simons Renaissance Technologies $1.2 billion
3 Raymond Dalio Bridgewater Associates $1.1 billion
4 William Ackman Pershing Square Capital Management $950 million
5 Israel (Izzy) Englander Millennium Management $900 million
6 Michael Platt BlueCrest Capital Management $800 million
7 Larry Robbins Glenview Capital Management $570 million
8 David Shaw D.E. Shaw Group $530 million
9 O. Andreas Halvorsen Viking Global Investors $450 million
10 Charles (Chase)
Coleman III
Tiger Global Management $425 million
Click to view the full ranking of the top 25 money earners

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