Hedge fund managers set new payout records in 2009

BOSTON Thu Apr 1, 2010 11:39am EDT

BOSTON (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.

Analysts had expected the overall increase after the average hedge fund gained 20 percent 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 percent, 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 percent on his bet that certain bank shares would recover. Tepper earned a $4 billion payout that toppled John Paulson as the industry's record payout holder. Paulson's bet that housing prices would fall earned him $3.7 billion in 2007.

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. 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.

(Reporting by Svea Herbst-Bayliss; Editing by Derek Caney)

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Comments (4)
Anonmucker wrote:
Now we know who really runs the US government. And people still think their votes count for something.

Apr 01, 2010 12:08pm EDT  --  Report as abuse
mwrobb wrote:
“Oligarchy… a government in which a small group exercises control, esp. for corrupt and selfish purposes.”

Apr 01, 2010 2:28pm EDT  --  Report as abuse
jim1959 wrote:
it is a complete scandal. No one who has not invented the cure for cancer, created a world turning development or risked their own capital should make that kind of cash. It is particularly egregious that these people who play a zero sum game with other peoples money and create a massive dead loss for society make this money.

On the other hand, who is to blame! Like the compensation for bankers, why do the shareholders and the sources of capital (the pensioners and savers) tolerate this kind of practice? We are paying these people to steal from us! It is our capital, our life savings. But would feel better if these funds did not exist while while you earn an indexed rate of return rather than earning that stupid self promotional concept of alpha returns (because you know that I have benefited at another’s expense)?

While these people do not deserve a dime (I think they should pay it all back) the responsibility is not that of government. It is that of the rest of us , you included, who allow your savings to be given to these greedy, free riders that are really responsible. Forget the congressman, write your portfolio manager and take a stand!

Apr 01, 2010 2:48pm EDT  --  Report as abuse
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