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The 40 Highest-Earning Hedge Fund Managers

This article is more than 10 years old.

For most hedge fund managers, 2011 was a year to forget. The 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.

TO SEE THE FULL LIST OF THE HIGHEST-EARNING HEDGE FUND MANAGERS OF 2011 CLICK HERE

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.”

Steve Cohen, who has long been a powerful force in the equity markets, has had plenty of distractions recently. At 56, he just purchased a 4% stake in the New York Mets and is believed to be trying to buy the Los Angeles Dodgers. His SAC Capital Advisors has been hit by a fresh wave of legal scrutiny—an SAC employee has been accused by federal prosecutors of insider-trading—though Cohen has not been accused of any wrongdoing. Still, his hedge fund firm, which manages $14 billion, generated net returns of 8% in 2011. Cohen made $600 million last year.

David Shaw is no longer managing the day-to-day operations of his $23 billion D.E. Shaw & Co., but he remains involved in certain higher-level strategic decisions affecting the investment management businesses. D.E. Shaw’s Oculus fund produced an impressive 19.9% net return in 2011 and the firm’s Composite fund returned 6.2% net of fees. Shaw made an estimated $580 million in 2011.

Still, it was a 36-year-old betting on hot tech names like Facebook, Linkedin and Zynga who posted the best hedge fund returns in 2011. Charles Coleman III, who goes by the name of Chase, steered his $7 billion Tiger Global to net returns of 45%. He personally made an estimated $500 million in 2011. A “Tiger Cub,” who was trained at Julian Robertson's famed hedge fund shop, Tiger Management, Coleman grew up rich and is a direct descendant of Peter Stuyvesant. He formed Tiger Global in 2000 with $25 million from Robertson.

To determine the highest earning hedge fund managers of 2011, we examined hedge fund returns and worked to understand the fee and ownership structure of a wide array of hedge fund firms. Hedge funds generally reap fees equal to 20% of profits and 2% of assets, but we found all sorts of variations on this theme. In addition, our earnings figures include the personal gain or loss of each manager’s interest in their funds. Our figures are pretax, net of the firm’s expenses, and exclude proceeds or unrealized losses stemming from the shares in the hedge fund firms themselves.

The highest-earning European hedge fund manager in 2011 was Alan Howard, who recently moved to Geneva from London. A co-founder of Brevan Howard Asset Management, Howard’s $26 billion master fund led the way for the firm in 2011, returning 12.14% net of fees. His $36 billion hedge fund firm has become the destination of choice for high-profile traders fleeing investment banks ahead of Obama’s Volcker Rule. The firm, itself born when Howard and four Credit Suisse colleagues went solo in 2011, intends to keep hiring so long as talent is available.

The comeback kid of 2011 was Kenneth Griffin, founder of Citadel. His flagship Kensington and Wellington funds each produced net returns north of 20% in 2011—and have now clawed their way back to their pre-recession high-water marks after getting clobbered in 2008. Despite a lack of performance fees, Griffin still benefited tremendously from his funds’ performance in 2011 thanks to his personal investment in the funds. Griffin also in 2011 unloaded Citadel’s investment banking unit to Wells Fargo, effectively extinguishing his dream of building a full-service financial institution.  Griffin is going to stick to running a hedge fund. It’s a lucrative business.

TO SEE THE FULL LIST OF THE HIGHEST-EARNING HEDGE FUND MANAGERS OF 2011 CLICK HERE

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