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.

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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

[BBackSoon]

It will not be long until the only good paying jobs will be bodyguard for the filthy rich. Because once the revolution starts these are the people that will have the most to fear.

Viva la Revolution.

[LivingStardust]

The Paragons of Greed. Venal Incarnate.

You add nothing to the economy. You push paper. You make nothing of value, you merely leech the system.

In Dante's work, the greedy and venal are sent to the 5th Circle and condemned to lay face-down, paralyzed until they a purified of their unholy obsession and desire for power and possession and a position competing with God. Despite the fact that Dante has Statius, a soul condemned to the 5th Circle, become purified and join the ascension to Heaven, I wouldn't hold my breath for your lot.

And when milk is $40 a gallon and bread can't be bought, Hell is going to sound good to you venal bastards when the hungry poor show up.

[williamina]

Hey everybody, when milk is $40 per gallon StarDust will emerge from its mom's basement. Be scared, be very scared.

[LivingStardust]

Venal scumbags like yourself should be afraid of people like me. I can hurt you in ways you can't begin to imagine. All of them legal.

[NHIndependent]

TIme for a 70% tax on all personal income and captial gains over, say, $20 million...­.
we have a massive debt to payoff due to Bush, and the folks that profited from his
economic policies should foot the bill.

It will also reign in the abusive compensation that officers of publicly traded companies
give themselves.

In a capitalist society, those with the most money have the most power,
to equalize the power among all citizens, its time to pull more folks into the middle
class, via taxes if necessary.

[garbovatwins]

There is a pitiful sadness to the way your species has bound itself to money and wealth. It is not until you purge yourself of this behaviour that you will be allowed to join with others throughout the universe.

[WIpatriot]

Yeah, we know. But there's more than that.

[glitzqueen]

And these are the guys who lobbied like crazy to keep their income improperly taxed at 15% by calling it all capital gains -- never mind that they automatically take 20% off the top, whether they win or lose.

[ReasonIsMyReligion]

Let's all bear in mind that Hedge Funds do well when Wall Street tanks.

These guys are getting rich by betting -- correctly -- that the rest of us will LOSE.

It's like playing craps and betting on 7.