Hedge Fund Managers Earned Billions in 2005
Simons, Pickens Top $1 Billion for Managing Hedge Funds in 2005
By David Clarke and Katherine Burton
May 26 (Bloomberg) -- James Simons earned an estimated $1.5 billion last year, the most of any hedge-fund manager, followed by Boone Pickens at $1.4 billion, according to Institutional Investor's Alpha magazine.
The average pay of the top 26 earners rose 45 percent in 2005 to $363 million, the magazine said. Hedge funds returned 9.2 percent last year, double the Standard & Poor's 500 Index and about the same as in 2004, according to Chicago-based Hedge Fund Research.
``The founders and owners are taking the lion's share of the profit,'' said Henry Higdon, chairman of Higdon Barrett LLC, a New York-based executive search firm. ``These guys created firms and risked capital, you can't say they don't earn it.''
Hedge funds, private partnerships that typically require an initial investment of at least $1 million, try to make money whether financial markets rise or fall. While the average fund beat the S&P 500's 4.9 percent return in 2005, the industry continues to lag behind the 16 percent average gains in the 1990s.
Alpha arrives at the managers' earnings based on estimates of assets under management, fees, returns, personal investments in the funds and ownership stakes in their firms.
Top hedge-fund managers often earn far more than the best-paid chief executive officers, sports stars and celebrities.
Henry Paulson, 60, head of Goldman Sachs Group Inc., was the highest paid Wall Street executive last year, earning $38.3 million in salary, stock and options, up 28 percent from a year earlier. Film director George Lucas brought home $290 million last year, and golfer Tiger Woods earned $87 million, according to Forbes magazine.
The highest paid chief executive in 2005 was Richard Fairbank of Capital One Financial Corp., who earned $249.4 million, according to Forbes.
Simons, Pickens
Simons, 68, of Renaissance Technologies Corp., more than doubled the $670 million he earned in 2004, when he ranked second among hedge-fund managers. His $5.3 billion Medallion fund's return after taking 5 percent of the fund's assets and a 44 percent performance fee was 29.5 percent in 2005.
Pickens, 78, profited from energy investments that boosted his BP Capital Commodity Fund to a sevenfold return and returned 89 percent net for his BP Capital Energy Equity Fund.
George Soros, 75, was third on Institutional Investor's list with $840 million of income.
He ranked sixth in the 2004 survey, after taking home $305 million. The Hungarian-born billionaire rose to prominence by betting against the British pound in 1992. Soros's Quantum Endowment Fund climbed 12.3 percent last year, according to data compiled by Bloomberg.
Below is a table of the 10 hedge fund managers with the highest pay, according to Institutional Investor.
Steven Cohen, 49, retained fourth spot in the magazine's rankings. Cohen, who runs the $8 billion hedge fund SAC Capital Advisors LLC, increased his compensation to $550 million from $450 million in 2004.
Edward Lampert, a Yale economics graduate, fell to sixth place from first on the magazine's previous list, which put his earnings at $1 billion in 2004. His fund returned 9 percent last
year.
Lampert, 43 orchestrated the merger of Kmart and Sears, ESL's two biggest holdings.
In January 2003, Lampert was kidnapped outside his office by two armed men and held for 30 hours. He persuaded the kidnappers to let him go with a promise -- never fulfilled -- to pay ransom.
Bruce Kovner, 61, chairman of Caxton Associates LLC, ranked seventh. His Caxton Global Offshore fund had an 8 percent return. Kovner held the third place spot in 2004 by earning $550 million, according to Institutional Investor.
1. James Simons $1.5 billion Renaissance Technologies
2. Boone Pickens $1.4 billion BP Capital Management
3. George Soros $840 million Soros Fund Management
4. Steven Cohen $550 million SAC Capital Advisors
5. Paul Tudor Jones $500 million Tudor Investment
6. Edward Lampert $425 million ESL Investments
7. Bruce Kovner $400 million Caxton Associates
7. David Tepper $400 million Appaloosa Management
9. David Shaw $340 million D.E. Shaw
10. Stephen Mandel $275 million Lone Pine Capital
By David Clarke and Katherine Burton
May 26 (Bloomberg) -- James Simons earned an estimated $1.5 billion last year, the most of any hedge-fund manager, followed by Boone Pickens at $1.4 billion, according to Institutional Investor's Alpha magazine.
The average pay of the top 26 earners rose 45 percent in 2005 to $363 million, the magazine said. Hedge funds returned 9.2 percent last year, double the Standard & Poor's 500 Index and about the same as in 2004, according to Chicago-based Hedge Fund Research.
``The founders and owners are taking the lion's share of the profit,'' said Henry Higdon, chairman of Higdon Barrett LLC, a New York-based executive search firm. ``These guys created firms and risked capital, you can't say they don't earn it.''
Hedge funds, private partnerships that typically require an initial investment of at least $1 million, try to make money whether financial markets rise or fall. While the average fund beat the S&P 500's 4.9 percent return in 2005, the industry continues to lag behind the 16 percent average gains in the 1990s.
Alpha arrives at the managers' earnings based on estimates of assets under management, fees, returns, personal investments in the funds and ownership stakes in their firms.
Top hedge-fund managers often earn far more than the best-paid chief executive officers, sports stars and celebrities.
Henry Paulson, 60, head of Goldman Sachs Group Inc., was the highest paid Wall Street executive last year, earning $38.3 million in salary, stock and options, up 28 percent from a year earlier. Film director George Lucas brought home $290 million last year, and golfer Tiger Woods earned $87 million, according to Forbes magazine.
The highest paid chief executive in 2005 was Richard Fairbank of Capital One Financial Corp., who earned $249.4 million, according to Forbes.
Simons, Pickens
Simons, 68, of Renaissance Technologies Corp., more than doubled the $670 million he earned in 2004, when he ranked second among hedge-fund managers. His $5.3 billion Medallion fund's return after taking 5 percent of the fund's assets and a 44 percent performance fee was 29.5 percent in 2005.
Pickens, 78, profited from energy investments that boosted his BP Capital Commodity Fund to a sevenfold return and returned 89 percent net for his BP Capital Energy Equity Fund.
George Soros, 75, was third on Institutional Investor's list with $840 million of income.
He ranked sixth in the 2004 survey, after taking home $305 million. The Hungarian-born billionaire rose to prominence by betting against the British pound in 1992. Soros's Quantum Endowment Fund climbed 12.3 percent last year, according to data compiled by Bloomberg.
Below is a table of the 10 hedge fund managers with the highest pay, according to Institutional Investor.
Steven Cohen, 49, retained fourth spot in the magazine's rankings. Cohen, who runs the $8 billion hedge fund SAC Capital Advisors LLC, increased his compensation to $550 million from $450 million in 2004.
Edward Lampert, a Yale economics graduate, fell to sixth place from first on the magazine's previous list, which put his earnings at $1 billion in 2004. His fund returned 9 percent last
year.
Lampert, 43 orchestrated the merger of Kmart and Sears, ESL's two biggest holdings.
In January 2003, Lampert was kidnapped outside his office by two armed men and held for 30 hours. He persuaded the kidnappers to let him go with a promise -- never fulfilled -- to pay ransom.
Bruce Kovner, 61, chairman of Caxton Associates LLC, ranked seventh. His Caxton Global Offshore fund had an 8 percent return. Kovner held the third place spot in 2004 by earning $550 million, according to Institutional Investor.
1. James Simons $1.5 billion Renaissance Technologies
2. Boone Pickens $1.4 billion BP Capital Management
3. George Soros $840 million Soros Fund Management
4. Steven Cohen $550 million SAC Capital Advisors
5. Paul Tudor Jones $500 million Tudor Investment
6. Edward Lampert $425 million ESL Investments
7. Bruce Kovner $400 million Caxton Associates
7. David Tepper $400 million Appaloosa Management
9. David Shaw $340 million D.E. Shaw
10. Stephen Mandel $275 million Lone Pine Capital
posted by The Poster at 7:16 AM
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