Oxstones Investment Club™
The hedge fund industry is going through tough times. The average hedge fund manager has been unable to beat the market for the last 20 months. But the rewards for those traders who make it in this business remain enormous because of the rich fees hedge funds charge their clients. There are now 31 men on the Forbes 400 list of richest Americans who have derived much of their wealth from running hedge fund money. In other words, these hedge fund managers represent 8% of the nation’s wealthiest individuals, which is a bigger percentage than ever before.
The man who set the standard for hedge fund wealth in America, however, is no longer managing money for outside investors. George Soros, now 82, retired in 2011 and turned his hedge fund into a family office, returning just under $1 billion in assets to outside investors. The move made his investment shop immune to the hedge fund industry’s new disclosure requirements. But that doesn’t mean Soros is no longer a player in financial markets. His net worth is $19 billion. He recently brought in a new investment officer to help oversee the remaining assets belonging to his family and his foundations.
At age 76, Carl Icahn is showing no signs of slowing down. His hedge fund was one of the top performers in 2011 and continues to show strong gains in 2012 thanks to bets on Amylin, Hain Celestian and El Paso energy. That has helped his net worth, which is now $14.8 billion. Icahn, who was born in Brooklyn and grew up in Queens, has also returned his hedge fund’s outside money and decided to focus on investing his own funds as well as money belonging to his employees. Another hedge fund retiree, James Simons, rounds out the top three richest hedge fund managers in America. He is worth $11 billion. The “Quant King” officially retired from his $15 billion hedge fund firm, Renaissance Technologies, in 2010, but he continues to play an important role at the company and enjoys the proceeds. Renaissance’s Institutional Equities Fund was up 9.9% net of fees through the end of July 2012, while the firm’s Institutional Futures Fund was down 3% through June. The fund, based in East Setauket, N.Y., uses computer modeling to find inefficiencies in highly liquid securities.
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John Paulson pulled off the greatest trade ever five years ago by shorting subprime securities, but now he is having to sooth jittery investors after his biggest funds posted doubled digit losses for the past 18 months. Assets under management at his hedge fund firm, Paulson & Co., are down by $14 billion to $21 billion. His personal fortune dropped $4 billion in the past year to $11 billion.
The current king of the hedge fund industry, Ray Dalio, can be found in Westport Ct., where he lords over the world’s biggest hedge fund firm, Bridgewater Associates, with about $130 billion in assets. He scored spectacular returns in the 20% range last year at a time when most other hedge funds struggled. Dalio’s net worth is $10 billion. He has not been able to keep his winning streak going so far in 2012, with one of his most prominent funds down by nearly 3% through the first half of the year. Now at age 63, Dalio is ceding more responsibility and selling ownership stakes in his firm to his employees and clients. Also on the drawing board: A new $750 million headquarters that if it gets regulatory approval will be built by 2017 in Stamford, Ct., to accommodate more than 2,000 employees, nearly double the number of people currently working at the firm.
One star American hedge fund manager who keeps banging out solid returns year after year is Steve Cohen, whose net worth is now $8.8 billion. His Stamford, Ct., hedge fund firm, SAC Capital, currently has $13 billion in assets. Today Cohen is widely regarded as one of the most powerful forces in equity trading. After besting the competition with an 8% net return in 2011, a year in which the average hedge fund was down 5%, SAC’s flagship fund was up 8% through August of 2012. He has struck out recently on the baseball field, failing to purchase the Los Angeles Dodgers this spring. He does own a 4% stake in the New York Mets.
David Tepper is another hedge fund manager who owns part of a sports team, in his case he is a minority owner of the Pittsburgh Steelers. Tepper grew up in Pittsburgh, but now he lives in New Jersey. His net worth is $5.5 billion. Tepper is doing pretty well in 2012. His Palomino fund was up 13.3% net of fees through the first half of the year, after sinking 5.09% in 2011. His Appaloosa Management now manages $12 billion. In 2009, Tepper made one of the most legendary trades ever, earning $7 billion for his hedge fund by buying the shares of beaten down banks like Bank of America.
But the man everybody in the hedge fund business is talking about these days is 37-year-old Chase Coleman, who is probably the hottest money manager in the nation right now. His net worth is $1.5 billion and his firm oversees some $14 billion. Coleman is having another great year in 2012. While most other hedge fund managers struggle, his Tiger Global hedge fund racked up gains of 45% in 2011, outperforming just about every hedge fund on the planet; the fund continued its winning streak gaining in excess of 20% during the first half of 2012. Among his savvy moves: establishing venture capital vehicles to invest in hot private tech companies like Facebook well ahead of their initial public offering. Coleman made another smart move when he sold about 40% of his firm’s Facebook stake in the company’s IPO. A “Tiger Cub,” Coleman trained at Julian Robertson’s famed hedge fund shop, Tiger Management.
http://www.forbes.com/sites/nathanvardi/2012/09/19/americas-richest-hedge-fund-managers/
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