April 1, 2010 / 3:40 PM / 10 years ago

Hedge fund managers set new payout records in 2009

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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