NEW YORK Even in a brutal year, some top hedge fund managers made out like bandits.
The top 40 highest-earning hedge fund managers took home a combined $13.2 billion, according to a Forbes magazine survey. The top 10 hedge fund managers made more than $200 million each, while the lowest earning managers made $40 million each.
This came against the backdrop of one of the worst years ever for the industry, with the average hedge fund falling 5 percent, even as the U.S. stock market eked out a tiny gain.
Topping the charts was Raymond Dalio, who produced $13.8 billion for clients in 2011 while making returns in the 20 percent range. Dalio oversees the world's biggest hedge fund firm, Bridgewater Associates, with $120 billion in assets. His earnings amounted to $3 billion.
But what may be most interesting is that some of the most famous managers were beaten at their own game. Noticeably absent from the Forbes list of the 40 highest-paid managers were John Paulson and Philip Falcone, who both made billions betting against the subprime mortgage market.
James Simons of Renaissance Technologies was ranked behind Dalio with $2.1 billion in earnings for the year. Simons, characterized by Forbes as a 73-year-old "mathematical genius" who founded Renaissance, reaped the rewards of investing his own funds in the firm. In 2011, the firm's funds earned net returns as high as 33 percent.
Simons' leap of faith also worked for Carl Icahn. Icahn produced returns of 35 percent for his Icahn Capital Management and earned $2 billion thanks to successful bets on companies such as Motorola Mobility and El Paso. He has enjoyed a sizzling comeback since suffering a setback in 2008.
For many managers on the list, it did not always take double-digit gains to make hundreds of millions. Steve Cohen of SAC Capital Advisors was up 8 percent last year, but made $600 million, according to Forbes.
Cohen has been in the spotlight - yet again - because of allegations of improper trading at his Stamford, Connecticut-based fund. A technology analyst working for Cohen was arrested and charged with insider trading last month.
Although SAC Capital has been hit by a fresh wave of legal scrutiny, neither SAC nor Cohen have been accused of any wrongdoing.
Other managers on the Forbes list who finessed the volatile markets included David Einhorn, Boaz Weinstein and John Thaler. Weinstein of Saba Capital Management earned $90 million last year, while Einhorn of Greenlight Capital made $80 million.
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 percent net of fees. He earned $400 million last year.
Forbes said the $36 billion outfit has become the destination of choice for high-profile employees fleeing investment banks ahead of the imposition of the Volcker Rule, which cracks down on banks trading with their own funds for profit. The firm, itself born when Howard and four Credit Suisse First Boston colleagues went solo in 2011, intends to continue to keep hiring so long as talent is available.
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(Reporting by Sam Forgione;editing by Andre Grenon)