NEW YORK, NY--(Marketwired - May 6, 2014) - Appaloosa Management's David Tepper tops the latest installation of The Rich List, Institutional Investor's Alpha's 13th annual ranking of the world's 25 top-earning hedge fund managers.
Tepper took home a stunning $3.5 billion in 2013, having made a killing betting on airline stocks. All in all, 2013 was kind to the industry's biggest earners: The top 25 raked in $21 billion among them, roughly 50 percent more than the 25 best-paid managers reaped in each of the previous two years. Four managers earned more than $1 billion. To qualify for the list, a manager needed to have earned at least $300 million in 2013, up from $200 million the previous year.
This is the second consecutive year that Tepper has topped the Rich List and the third time in five years. Rounding out the top five this year are Steven Cohen of SAC Capital Advisors, John Paulson of Paulson & Co., James Simons of Renaissance Technologies and Kenneth Griffin of Citadel. The full Rich List ranking can be viewed at www.institutionalinvestorsalpha.com/HedgeFundRichList.
Cohen makes his 12th -- and final -- appearance on the Rich List. Earlier this year his firm agreed to return all client money as part of a government settlement of criminal insider trading charges and also agreed to pay criminal and civil penalties totaling $1.8 billion. But Cohen should have no difficulty cutting the feds a check: He ranked second on the Rich List thanks to his 2013 earnings of $2.4 billion. SAC, recently renamed Point72 Asset Management, now operates as a family office, trading only on behalf of Cohen, his family and his employees.
Paulson lands at No. 3, having pulled in some $2.3 billion in 2013. The Queens, New York, native, who famously earned $3.7 billion in 2007 by betting against the subprime market, hit it big again last year, in part because of successful investments in a handful of telecommunications, health care and biotechnology mergers.
While the 25 highest-earning hedge fund executives handily beat their take-home total for the previous year, 2013 was hardly the most profitable year for them as a group. The total earnings for this elite club are only the fourth highest in 13 years, while the managers' average combined earnings of $846 million ranks as only the fifth-best showing.
Only managers, principals or other employees of firms that manage money for outside clients are eligible for the Rich List, which tabulates a person's share of his firm's management and performance fees as well as the gains on his own capital. That last factor explains why some managers made the list even though their firms did not generate big investment returns. Those with sizable fortunes -- even people who are no longer managing money on a day-to-day basis -- can qualify for the ranking based simply on gains on their own capital invested in their own funds. That's one reason Renaissance Technologies founder James Simons, who has not managed that firm's funds for several years, ranked fourth after earning $2.2 billion. Simons is the only person to qualify for the list in all 13 years.
This year 20 managers who made last year's list are returning. Of the five who fell off, one retired at the end of 2012: Farallon Capital Management's Thomas Steyer. Three of the other four made an amount in 2013 that would have qualified them for the cutoff last year but relegated them to the Second Team of top-earning managers this year. Three individuals make their Rich List debuts this year: Greenlight Capital's David Einhorn, Highfields Capital Management's Jonathon Jacobson and Trian Partners' Nelson Peltz.
The Rich List's Second Team -- those 25 managers who missed qualifying for the main list -- includes several managers who have cracked the upper ranks in the past, including Michael Hintze of CQS, William Ackman of Pershing Square Capital Management, David Shaw of D.E. Shaw Group and Paul Singer of Elliott Management Corp.
The Second Team is heavily stocked with activist managers, who buy large stakes in public companies and then pressure management for changes. Four of the top seven Second Team managers engage in these strategies: Ackman, Singer, Jeffrey Ubben of ValueAct Capital and Barry Rosenstein of Jana Partners. Christopher Hohn of The Children's Investment Fund Management (UK) and Peter May of Trian also employ these tactics. This reflects a wider trend of money pouring into activist strategies at a time when most managers engaging in activist strategies are posting strong gains.
To view the full 2014 Rich List ranking, as well as the Second Team of top earners, Serial Earners and more, visit http://www.institutionalinvestorsalpha.com/HedgeFundRichList.
| The 2014 Rich List - Top Ten | ||||
| 1. | David Tepper (Appaloosa Management) | $3.5 billion | ||
| 2. | Steven Cohen (SAC Capital Advisors) | $2.4 billion | ||
| 3. | John Paulson (Paulson & Co.) | $2.3 billion | ||
| 4. | James Simons (Renaissance Technologies) | $2.2 billion | ||
| 5. | Kenneth Griffin (Citadel) | $950 million | ||
| 6. | Israel (Izzy) Englander (Millennium Management) | $850 million | ||
| 7. | Leon Cooperman (Omega Advisors) | $825 million | ||
| 8. | Lawrence Robbins (Glenview Capital Management) | $750 million | ||
| 9. | Daniel Loeb (Third Point) | $700 million | ||
| 10. | Paul Tudor Jones II (Tudor Investment Corp.) | $600 million | ||
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