John Paulson Forced to Settle for Second
Institutional Investor's Alpha magazine released its ranking of the top 25 hedge fund managers today. You'll be happy to hear that even though most people ended 2008 on a gloomy note, a handful of men who were already worth billions made billions more last year thanks to their canny trading strategies or the fact they predicted (correctly!) that a major shakeout was headed our way. In first place was Jim Simons, the former math professor who started the hedge fund Renaissance Technologies and who earned $2.5 billion on the basis of his complex computer-driven approach to the market. In second place: John Paulson, who totally saw the housing market was going to hell in a handbasket, bet big as a result, and has $2 billion to show for his efforts.
Of course, the hedgies weren't completely immune to the market turmoil. The overall pool of earnings in 2008—$11.6 billion—was roughly half the $22.5 billion the top 25 earned in 2007. And to qualify this year, a hedge funder needed to earn $75 million, down from the $360 million minimum in 2007.
But if you were thinking these fabulously wealthy hedge fund managers would be good people to despise right now given what's happening to the economy in general, think again. We're going to need their help to get out of this mess!
"Ironically enough, we're going to go beg for capital from the very people we've been trying to vilify," explained Keith R. McCullough, the chief executive of a firm in New Haven that provides trading analysis for hedge funds. Or, uh, not: "Mr. Paulson said he did not plan to participate in the new public-private investment program."
The Top 25 Moneymakers [II Magazine]
Top Hedge Fund Managers Do Well in a Down Year [NYT]
Top 25 Hedge Fund Managers Earned $11.6 Billion in 2008 [BN]