Hedge-Fund Managers Score Biggest Ever Payday

It's a good day to be a hedge fund manager.

Institutional Investor's Alpha magazine has just released it's annual ranking of top hedge funds earners, and some of the salaries are astounding.

At the top of the list is Paulson & Company founder John Paulson, who made a whopping $3.7 billion last year.

The New York Times reports on the hedge fund bonanza:

[Hedge fund managers'] unprecedented and growing affluence underscores the gaping inequality between the millions of Americans facing stagnating wages and rising home foreclosures and an agile financial elite that seems to thrive in good times and bad. Such profits may also prompt more calls for regulation of the industry.

Even on Wall Street, where money is the ultimate measure of success, the size of the winnings makes some uneasy. "There is nothing wrong with it -- it's not illegal," said William H. Gross, the chief investment officer of the bond fund Pimco. "But it's ugly."

The richest hedge fund managers keep getting richer -- fast. To make it into the top 25 of Alpha's list, the industry standard for hedge fund pay, a manager needed to earn at least $360 million last year, more than 18 times the amount in 2002. The median American family, by contrast, earned $60,500 last year.

Combined, the top 50 hedge fund managers last year earned $29 billion. That figure represents the managers' own pay and excludes the compensation of their employees. Five of the top 10, including Mr. Simons and Mr. Soros, were also at the top of the list for 2006. To compile its ranking, Alpha examined the funds' returns and the fees that they charge investors, and then calculated the managers' pay.

The Wall Street Journal adds:

Those who know the hedge fund business won't be particularly surprised that there were so many outsized successes. Hedge funds make the most money when there's a lot of volatility in the markets, and 2007 provided that with the roller coaster credit crunch. The glaring caveat is that hedge funds can make money in those roiling markets as long as they can stay in business. The markets are fickle, and the threat is that today's successful strategy can be tomorrow's liquidation, as the collapse of Peloton Advisors proved. As they say in those fund documents: Past results are no guarantee of future returns.

Story continues below

advertisement

The top ten earners, as reported by Alpha Magazine, are as follows:

1 John Paulson, of Paulson & Co., earned $3.7 billion

2 George Soros, of Soros Fund Management, earned $2.9 billion

3 James Simons, of Renaissance Technologies Corp., earned $2.8 billion

4 Philip Falcone, of Harbinger Capital Partners, earned $1.7 billion

5 Kenneth Griffin, of Citadel Investment Group, earned $1.5 billion

6 Steven Cohen, of SAC Capital Advisors, earned $900 million

7 Timothy Barakett, of Atticus Capital, earned $750 million

8 Stephen Mandel Jr., of Lone Pine Capital, earned $710 million

9 John Griffin, of Blue Ridge Capital, earned $625 million

10 O. Andreas Halvorsen, of Viking Global Investors, earned $520 million

But as Alpha warns:

Glory can be fleeting. Five managers from last year's top 25 are now officially, well, last year's news, including billionaires Edward Lampert of ESL Investments and Caxton Associates' Bruce Kovner.

See a list of who was considered a top earner last year, but has since fallen off.

Comments

[lobear00]

Has anyone seen this ambassy in Iraq, thats being built with "Our Tax Dollars. The "Corrupt Media in this country doesn't seem fit to show us any photos, are tape of it.

[joebaggadonuts]

Can we tax them or is it all gone overseas to tax havens, paid out in dividends at a max rate of 15%, or hidden via corporate shell games? The middle class rate doesn't apply to these gains, I suspect.

[MissingAmerica]

A clear sign that the system no longer works. These are the people getting the tax breaks. It's natural to think of the families in this country who are losing their homes to foreclosure, losing their jobs to China and India, and struggling to put gas in the tank or food on the table.

Our fuel and food prices are rising at record paces; groceries faster than for the past 20 years! The cost of milk has doubled in the past 6 months, and even such staples as bread and potatoes are rising.

I doubt that those listed in this article even think about that as they sit on their yachts, cruising the Mediterranean as they sit in their Jacuzzis guzzling Dom Perignon.

It's time for America to speak out for the masses. After all, without the "little people", they wouldn't be where they are.

It's time for an overhaul, starting with the administration that is allowing these brats the tax breaks. Time to impeach and bring sanity back to this country.

[lobear00]

Lets not forget the "Slime Republicans in the Congress "who are just as guilty! These are the creeps blocking Investigations , hearings, and protecting the clowns in the White House.

[ugmold]

It's time to get rid of this scum. Revolution!!! Its only going to get worse.

[mommadona]

"The top ten earners, as reported by Alpha Magazine, are as follows:

1 John Paulson, of Paulson & Co., earned $3.7 billion

2 George Soros, of Soros Fund Management, earned $2.9 billion

3 James Simons, of Renaissance Technologies Corp., earned $2.8 billion

4 Philip Falcone, of Harbinger Capital Partners, earned $1.7 billion

5 Kenneth Griffin, of Citadel Investment Group, earned $1.5 billion

6 Steven Cohen, of SAC Capital Advisors, earned $900 million

7 Timothy Barakett, of Atticus Capital, earned $750 million

8 Stephen Mandel Jr., of Lone Pine Capital, earned $710 million

9 John Griffin, of Blue Ridge Capital, earned $625 million

10 O. Andreas Halvorsen, of Viking Global Investors, earned $520 million"

TIME FOR SOME BIRDDOGGIN'.....

http://www.pets.ca/breedprofiles/a/pointer/p7.jpg

Yeehaw!

Onward!

[schatsie]

You have to admire these guys, imagine paying NO PAYROLL TAXES and 15% INCOME Taxes, while the rest of us are stiffed....

[Sundialsvc4]

There certainly is a point where greed becomes ... disgusting.

I know that I could not possibly match the eloquence of Dante's "Inferno," where he paints so many colorful pictures of the just-desserts of the depravity of unchecked greed. For this is what this truly is: craven depravity.

"Give away everything that you have to the poor, and follow Me."

"Send Lazarus over here that he might place a drop of cool water on my tongue, for I am in torment in this flame!" "No, between us a great gulf is fixed. But Lazarus would not come to you even if he may, because now he is comforted and it is you who are in torment."

[Irons]

Yeah, but money doesn't buy happiness.

[ugmold]

Yes, but lack of it buys misery

[Ramus]

My neighborhood has been invaded by these hedge fund managers. They have trophy wives and six kids and a nanny for each one. A few of them are polite, regular people - but most of them are stupid arrogant consumers. They've ruined the hood. All the small local shops have been bought out by the mall people. We should tightly regulate this industry..but tit won't happen because these people buy off the politicians.

[Podewumun]

Rent.

[BethStuart]

Back in the 1930's, there was a saying that left to its own devices, capitalism would cut its own throat. The reforms of the New Deal were designed to prevent that from happening. Now that Wall Street lobbyists have succeeded in rolling back those reforms, nature is once again taking its course.

[Erdgeist]

Not one of these funds makes so much as a pencil. It is wealth by the exploitation of those who labor. The lesson here--and a horrible one for the average American--is that the current economic policy of the U.S. is this: The greater part of working America should be made wretched if their labor can provide great wealth, the bulk of it going to the few.

[ignorantwillyharper]

It won't belong before the rich will not need to be escorted on the roads and highways, as there won't be that much traffic. You and I will be in the graden trying to grow something to survive on.

[ramal]

I can't wait until the day that angry mobs sweep through the streets of every major U.S. city with the blood curdling chant of, "Eat the rich! Eat the rich!"

[calgary]

I think if people are really upset at this. They should spend years doing math, go to a top notch grad school and take the hardest courses on quants and stats. Get a job on Wall street, learn the secrets of making money. Start a hedge fund, make billions but donate it all back to charities. Don't complaint if you are neither smart enough nor work hard enough.

[LivingStardust]

Or not crooked or venal enough, fascist defender. Hard work? Had plenty, made lots of money but within the bounds of reasonable behavior. I have a better education than 99% of Wall Street and if you don't see the problem with arbitrage as it relates to production capacity and market stability, then YOU are the idiot. I thought Canadians were smarter than that.

[maxfusion]

They will anoint her thighness to the throne. Lesbians rejoice.

[vippy]

And those people will not let Obama have the reign, bet on it!

[MilwaukeeDan]

At one time, the United States economy was based on manufacturing and selling to the whole world, now we just shuffle papers for profits. One of these days, this whole scheme will come crashing down on us.

[Podewumun]

It already has, MilwaukeeDan.

Got milk?