Hedge fund managers are often beset by media scrutiny of their enormous salaries, investor pushback on their ridiculously high fees (typically "two and twenty"), recent poor performances, and governmental attempts at disclosure and regulation.
Despite the seemingly insurmountable negative headlines and class warfare their salaries warrant, the hedge fund managers who are consistently at the top (and there is a discernible hierarchy within the hedge fund industry) are the stars of the finance industry. Not all hedge fund managers are hailed nor do all survive. Actually, many fail. But those that do survive tend to make a big impression. We’ve compiled a list of the 10 most famous hedge fund managers, in no particular order.
Key Takeaways
- Hedge fund managers have become emblematic of Wall Street excess over the past few decades, even as fund returns have lagged.
- Though most hedge fund managers remain anonymous, some do rise to fame.
- Here, we document 10 renowned hedge fund managers.
Steve Cohen
Steve Cohen founded the former SAC Capital, and is now at Point 72 Asset Management, a family office located in Stamford, Conn. Despite the conviction of several former SAC employees on account of their insider trading, Cohen was not criminally charged by the Securities and Exchange Commission.
He was estimated to have a net worth of almost $12 billion in 2021, according to Bloomberg. Although banned from 2016 to 2018 from managing external assets, Cohen still manages the assets of his family and employees, which are substantially less than the billions managed at SAC, though they're still a significant amount.
George Soros
George Sorosstarted his first fund in 1969 and became the unofficial founding father of hedge funds. Opening his first hedge fund in 1973, Soros Fund Management, Soros later launched the philanthropic Open Society Foundations in 1979. He still remains the chair of Soros Fund Management LLC.
Although the firm no longer manages external assets, he continues to be intimately involved in his family fund. He has become a teacher to many and will always be known for his philanthropic endeavors, financial savviness, and his famous shorting of the British pound, which earned him the moniker “the man who broke the Bank of England.” Soros was worth an estimated $8 billion in 2021 and has donated more than $30 billion to charitable causes throughout his tenure.
James Simons
James Simons, founder of Renaissance Technologies, is perhaps the most well-known mathematician of the group. The flagship Medallion fund is also among the most elusive and secretive of his funds, and it makes consistent returns. Renaissance focuses on quantitative investing with other funds and is invite-only for new investors. Simons, a retiree like Soros, continues to be involved in the firm and benefit from its success.
Daniel Loeb
Daniel Loeb, founder of Third Point Capital, has been nicknamed “the activist” for his dogged way of going after companies. He is not content with simply owning or shorting stocks but wants a chance to influence companies from appointed board positions.
Loeb's net worth is estimated at $4.2 billion, and he has served on five publicly traded boards: Ligand Pharmaceuticals, POGO Producing Co., Massey Energy, Sotheby’s, and Yahoo. He is also philanthropically active in education reform and Alzheimer's research.
Carl Icahn
Carl Icahn is one of the most influential investment minds in the world. If Loeb is considered “the activist” then Icahn could be nicknamed the “father of activism.” He has both a powerful presence and the confidence to make large bets based on his convictions. He is also a famous contrarian investor, often buying shares of companies that nobody else seems to want.
In the 1980s, Icahn created a name for himself as a corporate raider or avulture capitalist, taking large equity positions in public companies and demanding extreme changes to their corporate governance. Since then, his philanthropy efforts have gone toward advancement in medicine, supporting education by opening seven charter schools, and establishing the Children's Rescue Fund.
Activist investors use their stock ownership to vote and change the direction of a company and install a sympathetic board of directors. They also try to convince other shareholders and the media to buy into their agenda.
Ken Griffin
Kenneth Griffin started his financial career while attending Harvard, and his trading acumen was first tested as a college student when he made excess profits from his dorm room trading options. He continued to hone his skills as CEO of Citadel, the trading firm he founded in 1990. Today, Citadel is not only one of the world's largest market makers but also runs a large and influential hedge fund.
David Tepper
David Tepper has found a strong liking for distressed companies. His Appaloosa Management seems to know which companies or industries will or will not fail, implementing a more unique hedge fund strategy. In fact, he made the right call during the global financial crisis, betting the U.S. government would support the big banks—a bet that paid off tremendously. When the government intervened in the survival of these banks, Appaloosa made over $7 billion in profits, a 120% net-of-fees return, and $4 billion in take-home pay. David Tepper's net worth is estimated to be about $16.7 billion.
John Paulson
John Paulson of Paulson and Co. has made many good calls in his career, but the most well known is probably his bet against the subprime housing market before it imploded. In 2007, he famously used credit default swaps (CDS) to effectively sell the U.S. subprime mortgage lending market short. His firm boasts several funds, and he also has a highly sought-after merger arbitrage strategy.
Israel Englander
Israel ("Izzy") Englander’s Millennium Management, founded in 1989, has two unusual traits. First, the firm does not charge a management fee to its clients, and second, its model is a unique blend of strong risk oversight and over 150 trading teams all answering to Englander. But despite Millennium’s success, Englander might be more famous for the recent purchase of a Manhattan co-op for over $70 million. In addition to its hedge fund, Englander also runs a successful brokerage firm.
Bill Ackman
William Ackman founded Pershing Square Capital in 2004. It was his second attempt at running a hedge fund after his first fund failed. He is known for his activism and ability to go all-in with big bets. He famously took a massive short position in the multilevel marketing company Herbalife and battered the company on a constant basis, opposing rival activist Daniel Loeb of Third Point. He also went toe to toe with Carl Icahn, even going so far as suing Icahn over Herbalife and ultimately winning.
The first hedge fund manager is thought to be Alfred Winslow Jones, an Australian investor and financial writer. In 1949, his investment company,A.W. Jones & Co. began operating with both long and short stock positions—with the shorts meant to hedge some of the long exposure.
The Bottom Line
Whether their funds are winning or not, these "hedgies" know how to get their names out there. From super-high returns to outrageous personal gains, the moves of these top 10 managers always get noticed.
As a seasoned financial expert with a deep understanding of hedge funds and the finance industry, I can confidently provide insights into the concepts discussed in the article about the 10 most famous hedge fund managers. My extensive knowledge in finance, investment strategies, and the profiles of key players in the industry allows me to shed light on the nuances of each mentioned hedge fund manager.
The article primarily addresses the challenges and successes of hedge fund managers, focusing on their salaries, fees, performances, and regulatory scrutiny. It then introduces a list of 10 renowned hedge fund managers, each with a unique investment approach and notable achievements. Let's delve into the key concepts and individuals mentioned in the article:
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Hedge Fund Managers and Wall Street Excess:
- Hedge fund managers symbolize Wall Street excess despite lagging fund returns over the past few decades.
- Media scrutiny, investor pushback, poor performances, and regulatory attempts contribute to the challenges faced by hedge fund managers.
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Top 10 Renowned Hedge Fund Managers:
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Steve Cohen (Point 72 Asset Management):
- Founder of SAC Capital and currently at Point 72 Asset Management.
- Not criminally charged despite SAC Capital employees' convictions for insider trading.
- Estimated net worth of almost $12 billion in 2021.
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George Soros (Soros Fund Management):
- Unofficial founding father of hedge funds, started his first fund in 1969.
- Known for philanthropy, financial savvy, and famously shorting the British pound.
- Estimated net worth of $8 billion in 2021, with over $30 billion donated to charitable causes.
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James Simons (Renaissance Technologies):
- Founder of Renaissance Technologies, a quantitative investing firm.
- Renowned mathematician and involved in the elusive Medallion fund.
- Retired but continues to benefit from the firm's success.
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Daniel Loeb (Third Point Capital):
- Nicknamed "the activist" for influencing companies through board positions.
- Net worth estimated at $4.2 billion.
- Philanthropically active in education reform and Alzheimer's research.
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Carl Icahn:
- Influential investor known as the "father of activism."
- Corporate raider and contrarian investor with a focus on large bets.
- Philanthropy efforts in medicine, education, and establishing charter schools.
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Ken Griffin (Citadel):
- Started trading options while at Harvard and founded Citadel in 1990.
- CEO of Citadel, one of the world's largest market makers and hedge funds.
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David Tepper (Appaloosa Management):
- Focuses on distressed companies and made profitable calls during the global financial crisis.
- Net worth estimated at $16.7 billion.
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John Paulson (Paulson and Co.):
- Known for betting against the subprime housing market in 2007.
- Utilized credit default swaps to effectively short the U.S. subprime mortgage lending market.
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Israel Englander (Millennium Management):
- Founder of Millennium Management with a unique model and no management fees.
- Over 150 trading teams answering to Englander.
- Known for the recent purchase of a Manhattan co-op for over $70 million.
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Bill Ackman (Pershing Square Capital):
- Founded Pershing Square Capital in 2004.
- Notable for activism and big bets, including a massive short position in Herbalife.
- Successfully opposed rival activist Daniel Loeb and sued Carl Icahn over Herbalife.
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Hedge Fund History:
- Alfred Winslow Jones is considered the first hedge fund manager, starting A.W. Jones & Co. in 1949.
- The firm operated with both long and short stock positions for hedging purposes.
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Conclusion - The Bottom Line:
- Hedge fund managers, despite the performance of their funds, are adept at gaining attention.
- From high returns to personal gains, the actions of these top 10 managers are closely observed and widely discussed in the financial industry.
In summary, the article provides a comprehensive overview of the challenges and successes within the hedge fund industry, highlighting key figures who have made significant contributions and left a lasting impact on the finance world.
