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Thursday 26 March 2009
Top hedge fund managers still making pots of money
The financial crisis may have turned much of Wall Street’s wealth into dross, but a select group of hedge fund managers has managed to maintain a golden touch that might make King Midas blush.
Top hedge fund managers still making pots of money
New York Times 26 March 2009
NEW YORK: The financial crisis may have turned much of Wall Street’s wealth into dross, but a select group of hedge fund managers has managed to maintain a golden touch that might make King Midas blush.
The top 25 managers reaped a total of US$11.6 billion (S$17.5 billion) in pay last year by trading above the pain in the markets, according to an annual ranking of top hedge fund earners by Institutional Investor’s Alpha magazine.
Mr. James Simons, a former mathematics professor who has made billions year after year for the hedge fund Renaissance Technologies, earned US$2.5 billion running computer-driven trading strategies.
Mr. John Paulson, who rode to riches by betting against the housing market, came in second with reported gains of US$2 billion. Mr. John Arnold, an energy trader in his early 30s, was third on the list, with US$1.5 billion.
And Mr. George Soros, also a perennial name on the rich list of secretive moneymakers, pulled in US$1.1 billion.
Of course, their earnings were not unscathed by the extensive shake-out in the markets. In a year when losses were recorded at two out of every three hedge funds, pay for many of these managers was down by several million dollars, and the overall pool of earnings was about half of the US$22.5 billion earned by the top 25 in 2007.
The managers’ compensation, which was breathtaking in the best of times, is eye-popping after a year when hedge funds lost 18 per cent on average and investors withdrew money en masse.
Government scrutiny, over Wall Street pay and the role all kinds of institutions play in the financial markets, is also mounting. Hedge funds are facing proposals for new taxes on their gains, and on Tuesday, Treasury Secretary Timothy Geithner said he would seek greater power to regulate hedge funds.
Some people on the list disputed Alpha’s calculations, which are estimates that include the increase in value of personal investments the managers made in their funds. But none offered different values for their bonuses or the soaring wealth in their funds.
To make the cut last year, a hedge fund hotshot needed to earn US$75 million, down sharply from the US$360 million cut-off for 2007’s top 25.
Still, amid the financial shake-out, the combined pay of the top 25 hedge fund managers beat that for every year before 2006.
‘The golden age for hedge funds is gone, but it’s still three times more lucrative than working at a mutual fund and most other places on Wall Street,’ said Mr. Robert Sloan, managing partner of S3 Partners, a hedge fund risk management firm.
Mr. Paulson - whose lofty earnings were down from the US$3.7 billion that Alpha estimated he earned in 2007 - said his pay was high in large part because he is the biggest investor in his fund.
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Top hedge fund managers still making pots of money
New York Times
26 March 2009
NEW YORK: The financial crisis may have turned much of Wall Street’s wealth into dross, but a select group of hedge fund managers has managed to maintain a golden touch that might make King Midas blush.
The top 25 managers reaped a total of US$11.6 billion (S$17.5 billion) in pay last year by trading above the pain in the markets, according to an annual ranking of top hedge fund earners by Institutional Investor’s Alpha magazine.
Mr. James Simons, a former mathematics professor who has made billions year after year for the hedge fund Renaissance Technologies, earned US$2.5 billion running computer-driven trading strategies.
Mr. John Paulson, who rode to riches by betting against the housing market, came in second with reported gains of US$2 billion. Mr. John Arnold, an energy trader in his early 30s, was third on the list, with US$1.5 billion.
And Mr. George Soros, also a perennial name on the rich list of secretive moneymakers, pulled in US$1.1 billion.
Of course, their earnings were not unscathed by the extensive shake-out in the markets. In a year when losses were recorded at two out of every three hedge funds, pay for many of these managers was down by several million dollars, and the overall pool of earnings was about half of the US$22.5 billion earned by the top 25 in 2007.
The managers’ compensation, which was breathtaking in the best of times, is eye-popping after a year when hedge funds lost 18 per cent on average and investors withdrew money en masse.
Government scrutiny, over Wall Street pay and the role all kinds of institutions play in the financial markets, is also mounting. Hedge funds are facing proposals for new taxes on their gains, and on Tuesday, Treasury Secretary Timothy Geithner said he would seek greater power to regulate hedge funds.
Some people on the list disputed Alpha’s calculations, which are estimates that include the increase in value of personal investments the managers made in their funds. But none offered different values for their bonuses or the soaring wealth in their funds.
To make the cut last year, a hedge fund hotshot needed to earn US$75 million, down sharply from the US$360 million cut-off for 2007’s top 25.
Still, amid the financial shake-out, the combined pay of the top 25 hedge fund managers beat that for every year before 2006.
‘The golden age for hedge funds is gone, but it’s still three times more lucrative than working at a mutual fund and most other places on Wall Street,’ said Mr. Robert Sloan, managing partner of S3 Partners, a hedge fund risk management firm.
Mr. Paulson - whose lofty earnings were down from the US$3.7 billion that Alpha estimated he earned in 2007 - said his pay was high in large part because he is the biggest investor in his fund.
NEW YORK TIMES
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