Renaissance founder tops 2008 hedge fund earners
James Simons, founder of Renaissance Technologies Corp, which uses mathematical models to invest across various markets, became the highest earning hedge fund manager last year after he took home $2.5bn (€1.85bn), an annual earnings survey has found.
According to industry publication Alpha, the average earnings for the world's best-paid 25 hedge fund managers last year were $464m. However three of the four best-paid managers earned less last year than they did in 2007, as the troubled industry registered its worst recorded losses and redemptions.
Many of their less-well paid industry peers did likewise as hedge funds fell about 19% and suffered record redemptions, according to analysts Hedge Fund Research.
But Alpha said that the top earner was Simons, who proved that it pays to study maths. After completing his PhD in the discipline at the University of California at Berkeley in 1962, Simons worked in academia and finance before founding hedge fund manager Renaissance Technologies Corp in 1982. He moved up two places from third among his industry earners in 2007, to be the top earner.
His Renaissance trades various markets using mathematical models to invest. The firm is believed to manage around $25bn. Combining each manager's share of their firm’s fee income and performance of their money in funds, Alpha calculated that Simons suffered a 10% paycut last year.
John Paulson, founder of US manager Paulson & Co, came second by earning $2bn, a 46% reduction from his earnings in 2007, when his short trade on sub-prime mortgages paid handsomely. His $10bn Paulson Advantage Plus fund made about 33.3% last year, said investors, but fell short of its 42.9% annualised return since launching in late 2004.
John Arnold, who founded Texas-based Centaurus Energy Advisors in 2002, took bronze last year by making $1.5bn, as his firm's flagship fund made 80%, according to Alpha magazine. His firm invests in instruments related to energy worldwide, but also has stakes in power plants.
George Soros's $1.1bn last year saw him slip from second place in 2007 to fourth as the 78-year old's earnings fell by two-thirds. The Soros Quantum fund rose 8% last year, according to investors. Soros may regard himself as much a philanthropist and commentator these days as a fund manager.
Those from fifth place downwards pocketed less than $1bn.
• Bridgewater Associates' Raymond Dalio made $780m • Caxton Associates founder Bruce Kovner earned $640m • David Shaw, founder of D.E. Shaw & Co, made $275m • Druckenmiller, at Duquesne Capital Management, pocketed $260m • David Harding, founder of London computer-driven hedge fund house Winton Capital Management, made $250m • Alan Howard, co-chief executive of global macro manager Brevan Howard Asset Management, made $250m • John Taylor, chairman of New York's FX Concepts, made $250m
Spokespeople for Winton and Brevan Howard had not provided comments by the time this article went to press. The US headquarters of the other funds could not be reached by the time this article was published.
-- Write to David Walker at dwalker@efinancialnews.com
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