Hedge Fund Managers set New Payout Records in 2009


Date: Monday, April 5, 2010
Author: Reuters

Seven of the world's top hedge fund managers earned 10-figure paychecks and one set a record for the highest-ever payout last year due to a stock market rally that pushed returns to their highest levels in a decade.

Together, the industry's 25 best-paid managers collected a record $25.33 billion, more than double the amount they took home in 2008 when the financial crisis left many prominent funds nursing heavy losses.

In 2007, the top 25 set a record by taking home $22.3 billion.

The annual ranking, featuring the heads of the some of the industry's oldest and biggest hedge funds, was released by Institutional Investor's AR: Absolute Return + Alpha on Thursday [April 1].

Analysts had expected the overall increase after the average hedge fund gained 20% and investors began putting new money into the loosely regulated $1.5 trillion industry in 2009.

Hedge fund managers typically earn management fees plus performance fees that can be has high as 50%, helping cement conventional wisdom that it can be extremely lucrative to run a hedge fund. Some funds delivered dramatically better returns than the average which helped their managers take home billions, again.

David Tepper's Appaloosa Management gained more than 130% on his bet that certain bank shares would recover. Mr. Tepper earned a $4 billion payout that toppled John Paulson as the industry's record payout holder. Mr. Paulson's bet that housing prices would fall earned him $3.7 billion in 2007.

Mr. Paulson, however, still made the list of top earners, ranking in fourth position with a $2.3 billion paycheck. He followed philanthropist George Soros whose $3.3 billion put him into the No. 2 spot and James Simons who earned $2.5 billion to rank as No. 3. Mr. Simons, a former mathematics professor announced his retirement from Renaissance Technologies last year.

SAC Capital Advisors' Steven Cohen ranked as the fifth- highest earner with $1.4 billion. He was followed by Icahn Capital's Carl Icahn, ESL Investment's Edward Lampert, Citadel Investment Group's Kenneth Griffin, Centaurus Advisors' John Arnold and Harbinger Capital Partners' Philip Falcone.