Alpha Magazine's list of the top 25 hedge fund earners is out for 2006. The average earnings over the whole group is a meager $570 million vs $362 million last year. Those earning less than $240 million in 2006 need not apply; that was the cutoff point vs $130 million in 2005. And as he topped last year's list, James Simons of Renaissance Technologies Corp leads the pack with $1.7 billion.
No managers made more money than the triumvirate of James Simons of Renaissance Technologies Corp., Citadel Investment Group's Kenneth Griffin and Edward Lampert of ESL Investments. Between them they earned an estimated $4.4 billion -- more than all the 25 top-paid managers combined made in each of the first two years of our ranking. Keep in mind that Alpha uses two components to arrive at hedge fund managers' earnings: the gains on their own capital in their funds and their share of their firm's management and performance fees. Simons, Griffin and Lampert each have well over $1 billion of their own capital invested in their own funds.
Like Carnegie, Rockefeller and Vanderbilt before them, Alpha's band of billion-dollar earners couldn't be any more different from one another. Math whiz Simons, who made $1.7 billion to repeat as No. 1, has assembled an army of rocket scientists to build complex computer models that rapidly trade markets around the world, hoping to exploit tiny price changes. Griffin, No. 2 with $1.4 billion in earnings, has built a huge firm by hedge fund standards -- Citadel has more than 1,000 employees -- expanding into ancillary businesses like hedge fund administration and market making. Lampert, who made $1.3 billion in 2006 to finish at No. 3, has stashed the bulk of his assets in a single company -- retailer Sears Holdings Corp., of which he is chairman.
No managers made more money than the triumvirate of James Simons of Renaissance Technologies Corp., Citadel Investment Group's Kenneth Griffin and Edward Lampert of ESL Investments. Between them they earned an estimated $4.4 billion -- more than all the 25 top-paid managers combined made in each of the first two years of our ranking. Keep in mind that Alpha uses two components to arrive at hedge fund managers' earnings: the gains on their own capital in their funds and their share of their firm's management and performance fees. Simons, Griffin and Lampert each have well over $1 billion of their own capital invested in their own funds.
Like Carnegie, Rockefeller and Vanderbilt before them, Alpha's band of billion-dollar earners couldn't be any more different from one another. Math whiz Simons, who made $1.7 billion to repeat as No. 1, has assembled an army of rocket scientists to build complex computer models that rapidly trade markets around the world, hoping to exploit tiny price changes. Griffin, No. 2 with $1.4 billion in earnings, has built a huge firm by hedge fund standards -- Citadel has more than 1,000 employees -- expanding into ancillary businesses like hedge fund administration and market making. Lampert, who made $1.3 billion in 2006 to finish at No. 3, has stashed the bulk of his assets in a single company -- retailer Sears Holdings Corp., of which he is chairman.
Today's hedge fund tycoons wield enormous power that goes well beyond the business world. Griffin and Steven Cohen, the founder of SAC Capital Advisors (and No. 5 on our list, with $900 million in earnings), are major forces in the art market, regularly ranked among the world's ten biggest collectors, according to ARTnews magazine.
Here's the full list of 25:
1 James Simons
2 Kenneth Griffin
3 Edward Lampert
4 George Soros
5 Steven A. Cohen
6 Bruce Kovner
7 Paul Tudor Jones II
8 Timothy Barakett
9 David Tepper
10 Carl Icahn
11 John Arnold
12 Israel Englander
13 Marc Lasry
14 Raymond Dalio
15 T. Boone Pickens Jr.
16 David Slager
17 Glenn Dubin
18 Henry Sweica
19 James Palotta
20 Daniel Och
21 Jeffrey Gendell
22 Barry Rosenstein
23 Noam Gottesman
24 Pierre LaGrange
25 Nathaniel Rothschild
1 James Simons
2 Kenneth Griffin
3 Edward Lampert
4 George Soros
5 Steven A. Cohen
6 Bruce Kovner
7 Paul Tudor Jones II
8 Timothy Barakett
9 David Tepper
10 Carl Icahn
11 John Arnold
12 Israel Englander
13 Marc Lasry
14 Raymond Dalio
15 T. Boone Pickens Jr.
16 David Slager
17 Glenn Dubin
18 Henry Sweica
19 James Palotta
20 Daniel Och
21 Jeffrey Gendell
22 Barry Rosenstein
23 Noam Gottesman
24 Pierre LaGrange
25 Nathaniel Rothschild
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