In this piece, we will take a look at the 20 highest paid hedge fund managers of all time. If you want to skip our analysis of the hedge fund industry and why 2022 was a crucial year for the sector, then head on over to 5 Highest Paid Hedge Fund Managers of All Time.
The hedge fund industry is one of the most lucrative sectors out there. It primarily involves financial firms that use leverage to make big bets on the stock market – a risky gambit that carries the promise of massive payouts should the investments turn out to be winners but equally big losses should the tides of fate turn against them.
The latter part of the hedge fund proposition came into full effect last year. 2022, after 2020, was one of the most tumultuous years on the stock market as the chickens of the coronavirus fiscal policy came to roost and were injected with steroids through the Russian invasion of Ukraine. During the pandemic, central banks all over the world slashed interest rates to ensure that their economies do not collapse in the wake of greater movement restrictions and stay at home requirements. At the same time, governments opened their wallets and deposited generous stimulus checks into eligible accounts to ensure that most people can keep up with the costs of living during an economic crisis. As they say, the road to hell is paved with good intentions, and these decisions had the natural effects of injecting too much money into the economy and beefing up spending. This, then, led to historic inflation last year, which was compounded by a disruption in the energy markets that led to high energy costs.
So why is this relevant to the hedge fund industry? Well, to compensate for their earlier actions, central banks started raising interest rates effectively, with the sole aim of slowing down economic growth to curtail inflation. This caused major stock markets to shed double percentage digits in value and ended up dealing hefty blows to some of the biggest hedge funds in the world. As 2022 ended, the hedge fund industry had bled a whopping $208 billion, and the tumble sent shivers down major firms. These losses were not distributed heavily, however. The hardest hit hedge fund last year was Chase Coleman’s Tiger Global which alone accounted for close to one tenth of the entire industry’s losses.
Tiger Global’s portfolio, which is the sum of all its investments in stocks or exchange traded funds, was worth $45.9 billion at the close of 2021, saw a series of dizzying drops throughout the year that would make the rest of us lose our hair. As the first quarter ended, the fund’s portfolio was worth $26.6 billion, by the end of the second quarter it had dropped to $11.9 billion; and as if this wasn’t enough, its third and fourth quarter closing values had stood at $10.8 billion and $8.1 billion, respectively. The fund’s literal fall from heaven is the biggest case study of the hedge fund industry in recent times as it illustrates that just like the funds can soar to billions of dollars in the blink of an eye, their downfall can be equally, if not more, quicker.
However, just as Tiger faltered, Ken Griffin’s Citadel Investments prospered. Citadel’s rocker of a year on the stock market saw it beat the oracle of investment, Ray Dalio’s Bridgewater Associates. The former returned $16 billion in 2022, while the latter returned a much smaller $6.2 billion. So what is Ken Griffin investing in these days? Well, we took a look at Ken Griffin’s top investments and found out that some of his biggest stakes are Adobe Inc. (NASDAQ:ADBE), NVIDIA Corporation (NASDAQ:NVDA), and Meta Platforms, Inc. (NASDAQ:META).
Do these investments show that Ken Griffin has a crystal ball hidden somewhere in his hedge fund’s headquarters in Florida? Looking at the share prices of two of his top investments, namely NVIDIA and Meta, suggests that this might very well be the case. To see where we’re heading, consider the fact that NVIDIA’s shares are up by a stunning 221% year to date while Meta has gained 151%. Narrowing our performance band to only include gains from March end to mid July shows that the shares of the two companies have appreciated by 65.7% and 47.6%, respectively. Seems like Ken Griffin really can’t do anything wrong these days if you ask us.
As to what it takes to get where Mr. Griffin is today, he shared valuable insights in a talk at Yale University in April, as he outlined:
Well there’s a little saying, a little quip that I like to make. History is written by the winners. Right. So the wonderful history of Citadel is how we’re the most profitable hedge fund of all time. The chapter of how we were on the verge of going business in ’08 is now like a footnote in that book. All right. That’s a very important note. It is now all been an easy march to success. It’s had, you know, I think have the interesting position in life I probably lost, my team has probably lost more money that perhaps any other firm in existence. We just happened to have made more money [LAUGHS] than almost any other firm in existence. And it’s the net that everyone talks about. I mean there’s years when our lost are. . are. . .hundreds of billions of dollars, I don’t know if it’s hundreds, it’s over a hundred, maybe hundreds. It’s numbers are incomprehensible, right. So, number is all my losses are my tuition, I have the most expensive education in American history. And a number of my colleagues have education that are becoming competitively – expensive.
And I think it’s very important, that like, we, in some sense you have have to have a moment of levity, okay? If every time you lost money, you got depressed and angry and you couldn’t deal with it, you’d just have a very short career. you’d just have a very short career. So you need to be able to take a step back and go, ‘it’s a tuition bill I paid.’ And it doesn’t mean that you don’t think very long and hard about what went wrong. But you have to keep it in perspective.
With these details in mind, let’s take a look at the highest hedge fund managers in the world.
Ken Griffin of Citadel Investment Group
Our Methodology
To compile our list of the highest paid hedge fund managers in the world, we used their net worth estimates from Forbes Magazine as of July 2023. Net worth, in our opinion, is a better estimate of their compensation since it rewards them throughout their lifetime for their investing and stock picking skills. The top 20 highest paid hedge fund managers that make the most money are as follows. To see how these figures have evolved over time, you can check out 15 Richest Hedge Fund Managers in the World.
20 Highest Paid Hedge Fund Managers of All Time
20. Andreas Halvorsen
Latest Net Worth Estimate: $5.9 Billion
Andreas Halvorsen is the founder and chief executive officer of the hedge fund Viking Global. The hedge fund was managing $21 billion in capital as of March 2023, and some of its biggest investments are in Visa Inc. (NYSE:V) and UnitedHealth Group Incorporated (NYSE:UNH).
19. Stanley Druckenmiller
Latest Net Worth Estimate: $6.4 Billion
Stanley Druckenmiller is the former founder and manager of Duquesne Capital. He closed the hedge fund in 2010 and since then invests through his family office called the Duquesne Family Office. He rose to fame in 1992 when he teamed up with the legendary George Soros to make a killing by shorting the British Pound.
18. Bruce Kovner
Latest Net Worth Estimate: $6.6 Billion
Bruce Kovner is the founder of Caxton Associates. Despite having retired from the fund in 2011, he is still worth a cool $6.6 billion.
17. Christopher Hohn
Latest Net Worth Estimate: $6.7 Billion
Christopher Hohn is one of the few fund managers in the industry whose hedge fund has had close ties with the noble cause of helping children. He founded The Children’s Investment Fund Management in 2003.
16. David Siegel
Latest Net Worth Estimate: $6.8 Billion
David Siegel is the co founder and co chairman of the hedge fund Two Sigma. He is one of the few hedge fund gurus with a Ph.D. from the Massachusetts Institute of Technology.
15. Josh Overdeck
Latest Net Worth Estimate: $6.8 Billion
Josh Overdeck is Mr. Siegel’s co founding partner of Two Sigma. Like his partner, he is also known for his mathematical proficiency.
14. Philippe Laffont
Latest Net Worth Estimate: $6.9 Billion
Philippe Laffont is the founder of the hedge fund Coatue Management. He is among the group of investors who have been perpetually dubbed Tiger Cubs due to their former association with Tiger Global.
13. Paul Tudor Jones, II.
Latest Net Worth Estimate: $7.5 Billion
Paul Tudor Jones, the second, is the man behind Tudor Investment Corp – a fund that should have found a favorable trading environment in today’s macroeconomic uncertainty.
12. David Shaw
Latest Net Worth Estimate: $7.9 Billion
David Shaw is another math genius on our list. His fund, D. E. Shaw is known for quantitative investment, and taking advantage of his riches, the billionaire now heads his own research organization.
11. Chase Coleman, III.
Latest Net Worth Estimate: $8.5 Billion
Chase Coleman, the third, is the founder of Tiger Global – the ill fated hedge fund that bled billions last year.
10. Carl Icahn
Latest Net Worth Estimate: $10.1 Billion
Carl Icahn, the man behind Icahn Capital Management is another popular name on Wall Street due to his activist investing approach. His wealth has dropped this year due to short seller allegations.
9. Israel Englander
Latest Net Worth Estimate: $11.3 Billion
Israel Englander is the man behind Millennium Management. He set up the fund in 1989, and now, it is a multi billion dollar enterprise.
8. Michael Platt
Latest Net Worth Estimate: $16 Billion
Michael Platt set up BlueCrest Capital Management and grew it into a hedge fund behemoth in a quick time period. His fund is well known for regularly posting double digit returns.
7. Steve Cohen
Latest Net Worth Estimate: $17.5 Billion
Steve Cohen, the man who set up Point72 Asset Management, is one of the biggest names in the hedge fund industry. As of 2022 end, his fund has returned a cool $30 billion since being set up.
6. David Tepper
Latest Net Worth Estimate: $18.5 Billion
David Tepper is the founder and chairman of the hedge fund Appaloosa Management. His hedge fund had a portfolio worth $1.8 billion as of March 2023. Some of its biggest investments are in well known technology companies such as Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Meta Platforms, Inc. (NASDAQ:META). Mr. Tepper’s current net worth is at an all time high, and his hedge fund has seen its portfolio drop from the $2.4 billion in value that it stood at in March 2022.
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Disclosure: None. 20 Highest Paid Hedge Fund Managers of All Time is originally published on Insider Monkey.