2016’s Top Earning Hedge Fund Managers And Their Favorite Stocks

The hedge fund industry may be mired in performance woes and closures, but you wouldn’t know it from the immense earnings that the top hedge fund managers pulled down in 2016; even when some of them aren’t actively managing their firms anymore. 1,057 hedge funds were shuttered in 2016, the most since the financial crisis led to 1,471 closures in 2008. Among the firms to shut their doors in 2016 was Richard Perry‘s Perry Capital, one of the 140 biggest and most famous activist hedge funds (it still held a small portfolio at the end of 2016, but had sold off the majority of its holdings), and Eric Mindich‘s Eton Park has followed suit this year.

Despite the closures, hedge funds didn’t actually bleed assets under management, which rose to $3.02 trillion, thanks in part to greater than 5% gains for the hedge fund industry in 2016. While the gains helped overcome redemptions, they were still a far cry from the 12% gains in the broader market last year.

elwynn/Shutterstock.com

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed the SPY by more than 30 percentage points over the last 4.5 years (see the details).

The 25 top earning hedge fund managers did see their total earnings slide in 2016 compared to a year earlier, though I suspect you won’t be feeling sorry for them any time soon. They pulled in $10.9 billion last year, or about $436 million each on average, down from $12 billion in 2015 according to Forbes. In this article we’ll take a look at the top 5 on that list and check out their performance and top picks, beginning on the next page.