There may be no arena where the old adage that the rich get richer is more apparent than among the top-performing hedge fund firms.
We have chronicled this for the past 15 years in our annual Rich List, which identifies individual hedge fund managers who made the most money the previous year.
Alpha will publish its ranking of the 25 managers who made the most money for themselves in May. Keep in mind that Alpha ranks the top-earning managers based on their share of their firm’s fees plus gains on their capital invested in their funds.
Leveraged Capital Holdings (LCH), which calls itself the world’s oldest fund of hedge funds, annually highlights the polarization of hedge fund success in its annual survey of what it calls the world’s Greatest Money Managers. In its new report LCH found that in 2015 the top 20 hedge fund managers made $15 billion net of fees for their investors. This compares with a total cumulative loss of $99 billion suffered among all fund managers outside the top 20.
For all of that, the top 20 managers posted an average return of only 3.1 percent last year, on a weighted basis.
In 2014, LCH’s top 20 managers generated $6.9 billion in total gains for their investors.
In its look at yearly results, London-based LCH does not identify the individual top 20 names or quantify their gains or losses. The firm does rank individuals based on their performance since they began their careers, producing each year a kind of cumulative ranking (see the top 20 below).
LCH calculates that since inception, all hedge fund managers have generated net gains of some $835 billion. However, nearly half of that — $399 billion, or 47.8 percent — was made by the top 20 managers despite accounting for 15.3 percent of industry assets.
In 2015, Ray Dalio’s Bridgewater Pure Alpha Fund, which has made $45 billion for investors since its 1975 start, tops LCH’s cumulative ranking. In 2014, Bridgewater ranked second, behind George Soros’ Quantum Endowment Fund. Last year Quantum slipped to second, generating $42.8 billion in gains since 1973. (Keep in mind that Soros’ Quantum no longer has outside investors.)
David Tepper’s Short Hills, New Jersey–based Appaloosa Management ranks third at $22.8 billion on the 2015 list. Appaloosa has been around only since 1993, 20 years less than Quantum.
Seth Klarman’s Boston-based Baupost Group closely follows Appaloosa.
The annual ranking has two newcomers: Lee Ainslie III’s Dallas-based Maverick Capital and London-based Lansdowne Developed Markets Fund, headed by Peter Davies and Stuart Roden.
Maverick is among three Tiger Cubs on LCH’s top 20 list. The other two are O. Andreas Halvorsen’s Greenwich, Connecticut–based Viking Global Investors and Stephen Mandel Jr.’s Greenwich, Connecticut–based Lone Pine Capital.
Brevan Howard Fund’s Alan Howard squeezed into the ranking in record time. He ranks No. 12, having generated $17.1 billion in net profits since his fund’s 2003 inception. Brevan Howard, however, has lost money in each of the past two years.
Two firms remain on the list even though their founders have retired and passed the baton to new leaders: New York–based Caxton Associates and San Francisco–based Farallon Capital Management.
Here is the ranking of the 20 hedge fund managers that have generated the most profits for their investors since inception:
1. Bridgewater Pure Alpha Fund, Ray Dalio, $45 billion
2. Quantum Endowment Fund, George Soros, $42.8 billion
3. Appaloosa Management, David Tepper, $22.8 billion
4. Baupost Group, Seth Klarman, $22.6 billion
5. Viking Global Investors, O. Andreas Halvorsen, $22.5 billion
6. Lone Pine Capital, Stephen Mandel Jr., $22.4 billion
7. Paulson & Co., John Paulson, $21.4 billion
8. SAC Capital Advisors/Point72 Asset Management, Steven Cohen, $19.7 billion
9. Elliott Management, Paul Singer, $18.5 billion
10. Moore Capital Management, Louis Bacon, $18.1 billion
11. Farallon Capital Management, Thomas Steyer/Andrew Spokes, $17.7 billion
12. Brevan Howard Fund, Alan Howard, $17.1 billion
13. Millennium Management, Israel Englander, $17.1 billion
14. Och-Ziff Master Fund, Daniel Och, $15.2 billion
15. Caxton Associates, Bruce Kovner/Andrew Law, $14.6 billion
16. King Street Capital Management, Brian Higgins/O. Francis Biondi, $13.6 billion
17. Highfields Capital Management, Jonathon Jacobson, $12.6 billion
18. Maverick Capital, Lee Ainslie III, $12 billion
19. Lansdowne Developed Markets Fund, Peter Davies/Stuart Roden, $11.8 billion
20. Tudor BVI Global Fund, Paul Tudor Jones II, $11.5 billion
