4 Of The Richest Hedge Fund Managers

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The other day I posted 11 little known facts about hedge funds and a lot of people thanked me.

After all, as I detail in my bestselling book (download it here for free for a limited time), the hedge fund industry is VERY mysterious…and it shouldn’t be.

If you’re gonna aim to make a ton of money, you better do your research on which industries pay the best…and the hedge fund industry is the single highest paying industry in the world.

Here’s a solid guest post from a trading challenge student who researched some of the richest hedge fund managers in the world:

Did you know that the top 25 hedge fund managers earn more than all the 500 top CEOs combined?

Pretty crazy, right?

According to Forbes, the best shot you have at becoming part of the ultra wealthy would be to become a hedge fund manager. The average pay of these 25 hedge fund managers was $134 million in 2002, peaking at over $1 billion in 2007 and then fell to a ‘measly’ $537 million in 2012.

Keep in mind that the majority of finance jobs saw pay cuts after the financial crisis, so this was just part of the trend rather than a hedge fund specific event.

In a startling comparison, the pay of the average CEO is around $12 million, or “32 percent below its peak in 2000.”  This is less than the top 25 athletes are paid in baseball, basketball and football; over $15 million each, without adjusting for their highly profitable product endorsements.

So who are the top hedge fund managers? Here is a list of four that have made headlines in the past few years.

1. Let’s begin with David Tepper.

tepper

With a net worth of $7 Billion (March 2013), this guy has no shortage of spending money. He is 55 years old, and has performed exceptionally well the past few years. Most hedge funds underperformed in 2012, but his flagship fund posted returns of 30%! His $15 billion Appaloosa Management has generated average annualized net returns of approximately 30% since its origin in 1993. Tepper returned some cash to his investors at the end of 2012 and he continues to focus his philanthropic efforts on education and feeding the hungry in his home state of New Jersey. Food banks and pantries across New Jersey have seen a significant amount of Tepper’s cash in the form of donations. He gave $55 million to Carnegie Mellon’s business school in 2004 (his alma mater) and; it was renamed the Tepper School of Business. He is also a minority owner of the Pittsburgh Steelers.

2. Next up we have Leon Cooperman.

cooperman

This titan has a net worth of $2.5 Billion (as of March 2013). He was another standout in 2012, as he outperformed the vast majority of money managers, guiding his $6.6 billion Omega Advisors hedge fund to net returns of more than 25%. After growing up in the South Bronx, he started his career as a Xerox quality control engineer in 1965. He then pursued his MBA at Columbia University before joining Goldman Sachs, where he rose to the head of the bank’s asset management business. Looking for more opportunities, Cooperman departed in 1991 to found Omega, his own fund management company. He has also made some significant charitable donations, gifting a $20 million life insurance policy to the Jewish Community Foundation in February 2012, the largest gift ever given to that organization; he also gave $25 million to Columbia Business School in April 2012. Other major philanthropic involvements include the United Jewish Appeal, the NJ Performing Arts Center, the Crohn’s & Colitis Foundation of America and Paul Tudor Jones’ Robin Hood Foundation. Cooperman also serves as Treasurer of the Damon Runyon Cancer Research Foundation, where he oversees the foundation’s $60 million endowment.

3. Next up we have the ever outspoken Carl Icahn.
Icahn

You’ve probably heard about him in the news lately, with his stakes in AAPL, JCP, and DELL causing headlines. But this guy is no joke. He is worth a whopping $20Billion (as of March 2013) at the age of 77. The headlines he has been causing recently began in early 2013 when he had a brush up with short-selling hedge fund trader Bill Ackman over nutritional supplement seller Herbalife $HLF. Icahn took a roughly 13% position in the company, so he was betting on the stock increasing in value. In 2012, Icahn had one of the best returns in the investment world, making nearly $2 billion on some good bets. Another native of the New York area, Icahn grew up middle class in Queens and eventually got a securities arbitrage gig at Dreyfus & Co. A majority of his wealth was made staging buyouts in 1980s. His son Brett is getting more involved in the family business; Icahn handed him $3 billion in assets to manage over the summer, and his daughter reportedly manages his twitter account for him. The activist investor announced in 2012 that he is giving $200 million to the Mount Sinai School of Medicine and has given $40 million to support his six charter schools operating in the Bronx.

4. Lastly, we’ll talk about John Paulson.

paulson

With a strong net worth of $11.2Billion (as of March 2013), Paulson is another one of the wealthiest individuals on our list. Hedge fund titan Paulson didn’t have such a great 2012 and is now having to sooth jittery investors after his Paulson Advantage ended the year down more than 14%, its second straight year in the red. However, Paulson’s Enhanced fund returned nearly 20% net of fees last year, while the firm’s Credit Opportunities fund netted 8.4%. Assets under management at Paulson & Co. have decreased to 18 billion from $36 billion in early 2011. He was formerly a managing director of M&A at Bear Stearns, before founding his hedge fund firm in 1994 and becoming a billionaire in 2007 by shorting subprime mortgage securities, earning a $3.5 billion payout (known as the greatest trade ever). He also likes to give back. As an NYU alum and trustee, he donated $20 million to the school in 2009. He has also given $5 million to Southampton Hospital and is donating $15 million to a new maternity hospital in Guayaquil, Ecuador, where his father was born. One of his donations made headlines in October 2012, when he pledged $100 million to the Central Park Conservancy.

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