NEW YORK, NY--(Marketwired - Apr 15, 2013) - Last year was not the easiest time for investors to make money. Macroeconomic concerns continued to roil markets in the wake of the global financial crisis -- with the euro facing potential collapse, several European economies threatening to default on debt, China's economy slowing and the U.S. vexed by fiscal cliff challenges. Nonetheless the hedge fund managers who successfully navigated the complex market forces were handsomely rewarded.
No manager did better than David Tepper, founder of Short Hills, New Jersey-based Appaloosa Management. The blunt-spoken Tepper led the 12th annual Rich List ranking of the world's top-earning hedge fund managers compiled by Institutional Investor's Alpha. Tepper, who failed to qualify for the ranking a year ago, made $2.2 billion in 2012 and was one of four managers who earned more than $1 billion apiece. He is joined by Bridgewater Associates' Raymond Dalio, who is No. 2, with $1.7 billion, after topping the previous Rich List ranking with $3.9 billion. SAC Capital Advisors' Steven Cohen is third, with $1.4 billion. Rounding out the Fab Four is Renaissance Technologies' James Simons, with $1.1 billion.
In total, the 25 hedge fund managers on the Rich List pocketed $14.14 billion in 2012. Although this is the lowest sum since 2008, when most of the wealthiest and largest hedge fund managers lost money and failed to qualify for the Rich List, it was roughly in line with the 2011 total of $14.4 billion.
"The very best hedge fund managers proved in 2012 that they could deliver strong returns in challenging markets," says Michael Peltz, editor of the magazine group at Institutional Investor. The latest Rich List ranking can be found on the Institutional Investor's Alpha website.
The proprietary Rich List survey tabulates earnings from performance fees and management fees; for some of the funds, the latter can be substantial. Several of the top 25 earners led the year's top-performing funds, reporting 20 to 30 percent in gains. To be included among the top 25 on the Rich List, a manager had to have earned at least $200 million in 2012, up from $100 million in the previous year's ranking.
Two of the top 25 -- Millennium Management's Israel (Izzy) Englander and Tudor Investment Corp.'s Paul Tudor Jones II -- qualified for the 2012 ranking despite their firms' respective single-digit performance gains. They made the cut because they had so much of their own personal wealth invested in their funds.
Only 11 managers on this year's list returned from the previous year's ranking. Just one, Discovery Capital Management's Robert Citrone, made his debut this year. Several of 2011's top earners dropped from the rolls. Carl Icahn, for example, returned all outside money to investors in 2011. Centaurus Energy's John Arnold retired, while Brevan Howard Asset Management co-founder Christopher Rokos left his firm in 2012 to start a family office. CQS founder Michael Hintze is the lone non-U.S.-based hedge fund manager to make this year's list. The Australian-born financier earned $265 million in 2012, helped by a nearly 36 percent gain in his London-based firm's Directional Opportunities fund.
| The Top 10 | ||
| 1. | David Tepper (Appaloosa Management) | $2.2 billion |
| 2. | Raymond Dalio (Bridgewater Associates) | $1.7 billion |
| 3. | Steven Cohen (SAC Capital Advisors) | $1.4 billion |
| 4. | James Simons (Renaissance Technologies) | $1.1 billion |
| 5. | Kenneth Griffin (Citadel) | $900 million |
| 6. | Edward Lampert (ESL Investments) | $750 million |
| 7. | Stephen Mandel Jr. (Lone Pine Capital) | $580 million |
| 8. | Leon Cooperman (Omega Advisors) | $380 million |
| 9. | David Shaw (D.E. Shaw Group) | $530 million |
| 10. | Daniel Loeb (Third Point) | $380 million |
About Institutional Investor's Alpha
Institutional Investor's Alpha is a leading provider of news, analysis and rankings for the hedge fund industry, delivering the most insightful, entertaining and authoritative published content about hedge funds online and in print. Alpha is a publication of Institutional Investor, a leading financial publishing and information company for more than 40 years. Visit www.institutionalinvestorsalpha.com for more information.