A hedge fund can be described as an investment vehicle and business structure that brings capital from multiple investors and invests these resources into securities and other profitable investment instruments. The companies that run these hedge funds may be structured as limited partnerships or limited liability companies. It is important to note that hedge funds largely differ from mutual funds considering that they do not cap leverage and most of these investments made are highly liquid. Hedge fund managers are in charge of the investments made by their hedge funds. For hedge fund managers to be successful in business, it is important that they come up with a competitive advantage which is to have a well-defined investment strategy. By using this technique, they can get a high amount of capital, a great marketing plan and a workable risk management plan. Those who become successful in the hedge fund ventures make quite a large sum of money. Here are the highest-paid hedge fund managers as of a financial assessment conducted on February 1, 2017. The list comes in a descending order from 20 all the way to the richest hedge fund investor.
20. John Overdeck and David Siegel -Net Gains (Since Inception) $13.1 billion
These two are the persons who run the Two Sigma Investments LP. This is a New York City-based hedge fund that uses technological methods such as artificial intelligence, machine learning and distributed computing, for its business purposes. The hedge fund was founded in 2001 by John Overdeck, David Siegel and Mark Pickard. It has its center and main offices in New York City. The company has also extended to other parts such as Houston, London, and Hong Kong. According to directors and founders, the firm’s name “Two Sigma” was chosen to reflect the essence of the word sigma. A lower case sigma, σ, shows the volatility of an investment’s return over a given benchmark, while an upper case sigma, Σ, gives the overall sum. By adding these two volatilities of individual positions measured against the given benchmark, Two Sigma can amicably amplify and forecast trends.
The fund managed around $8 billion in November 2011, $23 billion in October 2014, and $32 billion by the end of 2015. In October 2013, Two Sigma Private Investments decided to join Stephen Hannahs to form a partnership that was referred to as Wings Capital Partners. This would be a commercial aviation private equity, investment, advisory and financing company. In July 2014, Simon Yates, Citigroup’s global head of equity derivative sales and trading, left the bank to join Two Sigma Investments. In 2016, Two Sigma Investments was ranked 11th on Penta’s list of top 100 hedge funds. By March 2017, the fund was running a competition on Kaggle so that it could come up with a suitable code trading. As of October 2017, the fund had assets amounting to more than $50 billion hence coming in at number 20. Two Sigma has been noted in the business field for its unusually high rate of return as compared to the other competitors.
19. Paul Tudor Jones – Net Gains (Since Inception) $13.5 billion
Paul Tudor Jones was born September 28, 1954. He is an American investor, hedge fund manager as well as a renowned philanthropist. In 1980, he founded Tudor Investment Corporation which is an asset management firm headquartered in Greenwich, Connecticut. After this he proceeded on creating the Tudor Group, a hedge fund holding company which mainly covers fixed income, currencies, equities, and other commodities. During the February 2017, Forbes Magazine determined his net worth to be $4.7 billion. This made him the 120th richest person on the Forbes 400 and the 19th highest earning hedge fund manager. Most people know him for his large scale philanthropy. This can be well seen in his passion in forming and developing the Robin Hood Foundation which focuses on poverty reduction.
18. Brian Higgins and Francis Biondi – Net Gains (Since Inception) $14.6 billion
These two persons are the founders and administrators at the King Street Capital hedge investment fund. King Street Capital Management can be defined as a global investment management company founded in 1995. Currently, King Street Capital Management manages an estimated amount of $19 billion. These investments include public equity and fixed income markets worldwide with the aim of assisting financially unstable companies in equity, bonds, foreign exchange, warrants as well as options.
17. Bruce Kovner and Andrew Law – Net Gains (Since Inception) $15.7 billion
Caxton Associates is known as a worldwide macro hedge fund founded by Bruce Kovner in 1983. It has its headquarters in New York City. With business expansion and growth, the firm also has branch offices in London, Sydney and Princeton, New Jersey. Caxton Associates define investments according to their research of global markets as well as the timely analysis of global economic trends. Caxton Associates went had a great generational transition in 2008 when Bruce Kovner stepped back from trading and selected Andrew Law as Chief Investment Officer. In 2011, Andrew was appointed Chairman, CEO and controlling general partner of Caxton Associates. This was after the retirement of Bruce. The hedge fund and has made more than $13bn for its clients which is close to 14 per cent annually. This makes the hedge fund rank at number 17.
16. Israel Englander – Net Gains (Since Inception) $18.2 billion
Israel Englander was born 1948 and is an American investor, hedge fund manager as well as philanthropist. In the year 1989, he and Ronald Shear started The Millennium Management hedge fund. The fund was started with $35 million and as of February 2017 has $34.77 billion in assets under management. Englander has a personal net worth of approximately $5.2 billion. Using these metrics, you can say that he’s the 16th highest earning hedge fund manager.
15. Alan Howard – Net Gains (Since Inception) $18.4 billion
Brevan Howard is a European hedge fund management company based in Jersey. Its funds are domiciled in the Cayman Islands. Alan Howard was among the five persons that took part in the foundation of the Brevan Howard Investment fund in the year 2002.As of October 2013 the fund had $ 40 billion as assets under management before experiencing some issues and getting to $18 billion in 2016.
14. Louis Moore Bacon – Net Gains (Since Inception) $18.4 billion
Louis Moore Bacon is an American investor, hedge fund manager and philanthropist. He is the founder and chief executive of Moore Capital Management. According to Forbes Magazine his net worth is be US$1.81 billion, making him the 14th richest person on the hedge fund investment career.
13. John Paulson – Net Gains (Since Inception) $18.4 billion
John Alfred Paulson is also an American investor, hedge fund manager as well as philanthropist. He is the leader of Paulson & Co. which is a New York-based investment management firm. He has been referred to as one of the most dominant person in high finances. Others have called him the man who made one of the biggest fortunes in Wall Street history. His great prominence and fortune came in 2007 when he earned close to $4 billion personally. This made him get transformed into a financial legend.t. In 2010, Paulson earned a personal net cash of $4.9 billion. The Forbes real-time tracker determined his net worth to be at $8.6 billion as of November 2016. In other businesses, Paulson has also become a great investor in gold.
12. Tom Steyer and Andrew Spokes -Net Gains (Since Inception) $18.9 billion
Farallon Capital Management is an American investment firm that controls and manages capital on behalf of institutions and individuals. The firm was founded by Tom Steyer in 1986.It has its headquarters in San Francisco, California. In a rough estimation, it has been found that the firm employs close to 165 professionals globally. Farallon’s main task is to manage capital for university endowments, foundations as well as high-net-worth individuals. As of 2017, the company’s wealth amounted to a possible an AUM of $11.1 billion.
11. Steve Cohen – Net Gains (Since Inception) $19.8 billion
Steven A. Cohen is an American investor, hedge fund manager and philanthropist. He has an estimated net worth of $13 billion as of February 2017and is ranked by Forbes as the 72nd richest man in the world, 11th highest earning hedge fund manager. In July 2013, the U.S. Securities and Exchange Commission charged Cohen with illegal insider trading charges. To be specific, he was not charged with insider trading himself but instead with failing to prevent insider trading at his firm. The firm’s legal counsel asked for a $1.8 billion settlement which finally allowed the company to release capital restrictions and concluded all of its positions by the end of the year. Steven Cohen manages his own money is quite active in the finance community.
10. Paul Singer – Net Gains (Since Inception) $ 21.8 billion
Paul Elliott Singer is an American hedge fund manager, activist investor, and philanthropist. He is the founder of Elliott Management Corporation which specializes in distressed debt acquisitions. Paul is also the founder and CEO of NML Capital limited which is a Cayman Islands-based offshore unit of Elliott Management Corporation. In 2017, Forbes estimated Singer’s net worth to be $2.9 billion. Singer’s philanthropic activities include financial support and funds provision to the Manhattan Institute for Policy Research. He has also taken part in writing against raising taxes for the 1% and aspects of the Dodd-Frank Act. In political matters, Singer is active in Republican Party politics and he joins others in the financial support to the National Republican Senatorial Committee. Fortune magazine has described him as one of the “smartest and toughest money managers” in the hedge fund industry. This gives him the chance to be ranked in number 10. Singer’s business model of purchasing distressed debt from companies and sovereign states and pursuing full payment through the courts has led to criticism but he has always had facts and details to defend his kind of model. He calls it a fight against charlatans who refuse to play by the market’s rules.
9. Andreas Halvorsen – Net Gains (Since Inception) $22.0 billion
Ole Andreas Halvorsen is a Norwegian-born investor, hedge fund manager, and philanthropist. He is the CEO and a co-founder of the Connecticut-headquartered hedge fund referred to as Viking Global Investors. Viking had $24 billion value assets under management as of the assessment done in October, 2017. Halvorsen has been consistently ranked among the top earning hedge fund managers, placing on the 11th in Forbes’ 2012 rankings and 9th in 2015, according to research and rankings done by Institutional Investor’s Alpha. Halvorsen is also a protégé of hedge fund manager Julian Robertson.
8. Steve Mandel – Net Gains (Since Inception) $22.2 billion
Stephen Mandel is an American investor, hedge fund manager, and philanthropist. He founded Lone Pine Capital in 1997 after working and having experience as the managing director at Tiger Management. In line with research done by Forbes Magazine, Mandel had a net worth of $2.5 billion as of January 2017. He is also the 274th richest person in the United States. He was chairman of Dartmouth’s board of trustees and is currently Chair of the National Board of Directors at Teach for America. Philanthropically works, he was able to create two charitable foundations: the Zoom Foundation and the Lone Pine Foundation.
7. Daniel Och – Net Gains (Since Inception) $23.1 billion
Daniel Och is an American investor, hedge fund manager, and philanthropist. He is the chairperson and Chief Executive Officer of Och-Ziff Capital Management Group, a global hedge fund and alternative asset management firm. As of February 2017, Forbes Magazine estimated his net worth to be standing at $3.2 billion which is actually down from his 2016 net worth of $3.7 billion. Och is a board member on the board of Endeavor. He is also the vice chair of Robin Hood Foundation, under Paul Tudor which is a charitable organization fighting poverty in New York City. In 2008, Och made a donation worth $28,500 to Democratic Senatorial Campaign Committee.
6. David Tepper – Net Gains (Since Inception) $23.5 billion
David Alan Tepper is an American investor, hedge fund manager, and philanthropist. He is the founder and CEO of Appaloosa Management which is a global hedge fund based in Short Hills, New Jersey. He graduated from the University of Pittsburgh in 1978 with a bachelor’s degree in economics before proceeding to earn his MBA from Carnegie Mellon in 1982. In 2013, he made his largest donation or gift of $67 million to Carnegie Mellon University, which actually has his name in the Tepper School of Business is named after him. For the 2012 financial and tax year, Institutional Investor’s Alpha ranked Tepper first due to his ability of earning a $2.2 billion paycheck. In 2016, Tepper made good earnings of $1.2 billion making him the world’s 6th highest earning hedge fund manager. David Tepper is arguably the greatest hedge fund manager of his generation. He has been steadily returning money to client investors in recent years. Tepper’s Appaloosa Management hedge fund firm is now able to manage a sum of $17 billion and is based in Miami Beach, Florida.
5. Ken Griffin -Net Gains (Since Inception) $ 25.2
Kenneth Griffin is an American investor, hedge fund manager, and philanthropist. He is the founder and CEO of the global investment firm Citadel that was founded in 1990. As of March 2015, Citadel was ranked one of the world’s largest alternative investment management firms with an estimated investment capital of $25 billion. Citadel’s group of hedge funds rank among the largest and most successful hedge funds in the world. Forbes describes Griffin as one of 2012’s highest earning hedge fund managers as well as one of the Forbes 400. Ken Griffin founded and runs Citadel, a Chicago-based hedge fund that manages more than $27 billion in assets. He founded Citadel in 1990 but first began trading from his Harvard dorm in 1987. He put a satellite dish on the roof to get real-time stock quotes. Citadel employs teams of traders and its hedge funds have been performing well in 2017. Griffin also owns Citadel Securities, one of Wall Street’s biggest market makers. As of October 2017, Griffin had an estimated net worth of US$8.5 billion, making him the wealthiest man in Illinois and the 52nd richest person in America.
4. Seth Klarman – Net Gains (Since Inception) $ 25.3 billion
Seth Andrew Klarman is an American investor and hedge fund manager. He is known as a value investor and is currently the CEO and portfolio manager of the Baupost Group which is a Boston-based private investment partnership that he founded in 1982.He closely follows the investment philosophy of Benjamin Graham and is known for buying unpopular assets while they are undervalued. Later, he seeks a margin of safety and makes profits from their rise in price. Since his fund is a $27 million-dollar inception to 2008 he has garnered a 20 percent compound return-on-investment and realized $31 billion in assets. In February 2017, Forbes Magazine estimated his personal fortune at US$1.55 billion. In 2015, Klarman was listed as the 15th highest earning hedge fund manager in the world. In 2008, he was inducted into Institutional Investors Alpha’s Hedge Fund Manager Hall of Fame. He has brought about numerous comparisons to fellow value investors such as Warren Buffett and to Buffett’s notation as the “Oracle of Omaha,” most people now know his as the “Oracle of Boston.”
3. David Shaw -Net Gains (Since Inception) $25.3 billion
David Elliot Shaw is an American investor, computer scientist, and hedge fund manager. He founded D. E. Shaw & Co. which is a hedge fund company that was once defined by Fortune magazine as “the most intriguing and mysterious force on Wall Street”.He is a former faculty member in the computer science department at Columbia University where he made his fortune exploiting inefficiencies in financial markets. His kind of strategies can be described as that of a high speed computer network. In 1996, Fortune magazine described to him as “King Quant” due to his firm’s pioneering role in high-speed quantitative trading. In 2001, Shaw transformed to full-time scientific research in computational biochemistry whereby he dealt with molecular dynamics simulations of proteins. In 2017 he has been found to run a $40 billion quantitative hedge fund firm.
2. Ray Dalio – Net Gains (Since Inception) $ 41.8 billion
Raymond Dalio is an American investor, hedge fund manager, and philanthropist. He is the founder of the world’s biggest hedge fund firm often referred to as Bridgewater Associates, which manages close $160 billion assets. His hedge fund suffered losses in the first half of 2016, but bounced back to end the year up by 2.4%. Dalio’s All Weather fund, which seeks to perform well in good markets and bad, was up by 11.6%. Dalio has an estimated net worth of $16.8 billion. Dalio announced in March 2017 that he would step down as co-CEO of Bridgewater as part of a company-wide shake-up by April 15. Jon Rubinstein, co-CEO of the fund, was announced to step down with Dalio, but would retain an advisory role. Even after all these, he still holds a great part in the hedge fund industry.
1. George Soros – Net Gains (Since Inception) $49.4 billion
George Soros, the renowned investor who in 2016 returned to managing money, is the world’s wealthiest hedge fund manager with a net worth of $25.2 billion. This is according to the 2017 ranking of the world’s billionaire financiers and investors by Forbes. Soros, a Hungarian-born veteran of finance who made a name for himself in the early 1990s with a bet against the British pound, has in recent years stepped back from the day-to-day management of investments. Soros, an immigrant from Hungary, put himself through the London School of Economics and later got his financial start on Wall Street in New York. In 1969, he started his own hedge fund with a total of $12 million, later branded as Quantum Fund. After making a fortune with the fund, Soros left the investment world to pursue philanthropy and returned in 2011 to start Soros Fund Management. But he returned to trading in June 2016 with a series of bearish calls, The Wall Street Journal reported at the time .Soros’ fortune increased from $24.9 billion in the 2016 ranking. In May 2017, his net worth amounted to $25.2 billion.