Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Wednesday, February 16, 2005

Top Incomes in 2003 for Hedge Fund Managers

Just an interesting article that I would like to add to the blog:

George Soros of New York-based Soros Fund Management earned an estimated $750 million in 2003, making him No. 1 in the latest ranking by Institutional Investor's Alpha of the world's most highly paid hedge fund managers.

Junk-bond specialist David Tepper of Chatham, New Jersey-based Appaloosa Management takes second place, earning an estimated $510 million in 2003, followed by James Simons of Renaissance Technologies Corp. in East Setauket, New York, who pulled down $500 million.

Soros regains the top spot in Alpha's third annual ranking of top hedge fund earners after falling off the list last year, when Bruce Kovner of New York-based Caxton Associates led the pack. This year Kovner ties for fifth place with Steven Cohen of SAC Capital Advisors in Stamford, Connecticut.

Both earned $350 million in 2003, according to Alpha estimates. They trailed fourth-ranked Edward Lampert of ESL Investments in Greenwich, Connecticut, who earned $420 million last year by Alpha's reckoning.

The wealth being created by hedge fund managers is simply staggering. Never have so few made so much so fast. The lowest earner on Alpha's 2003 ranking took home $65 million in 2003. Seventeen managers pulled down nine figures -- $100 million or more -- compared with just seven in 2002. The average take-home pay for the top 25 in 2003 was $207 million, nearly double 2002's $110 million.

The top ten earners in the hedge fund industry in 2003 were:
1. $750 million George Soros, SOROS FUND MANAGEMENT
2. $510 million David Tepper, APPALOOSA MANAGEMENT
3. $500 million James Simons, RENAISSANCE TECHNOLOGIES CORP.
4. $420 million Edward Lampert, ESL INVESTMENTS
5. $350 million Steven Cohen, SAC CAPITAL ADVISORS
5. $350 million Bruce Kovner, CAXTON ASSOCIATES
7. $300 million Paul Tudor Jones II, TUDOR INVESTMENT CORP.
8. $230 million Kenneth Griffin, CITADEL INVESTMENT GROUP
9. $150 million Daniel Och, OCH-ZIFF CAPITAL MANAGEMENT GROUP
10. $145 million Leon Cooperman, OMEGA ADVISORS

Hedge fund managers overwhelmingly run private operations and guard their secrecy. Alpha's formula for determining which hedge fund managers earned the most was based on two key factors: their share of the fees generated by the funds they managed, and their gains on their own capital in the funds.
These numbers were arrived at based on knowledge or estimates of the firms' capital at the beginning of the year, their performances, their fee structures and managers' ownership stakes. Publicly available sources were used, as well as the Institutional Investor's Alpha Hedge Fund 100 ranking of the biggest hedge funds (April/May 2004), which lists capital positions and fund performances. In making these judgments, II tried to choose conservative estimates.

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