March 30, 2012 at 10:10 AM ET
They say that wealth begets wealth. That sure rang true for many hedge fund managers in 2011.
The “Rich List” of Wall Street hedge fund managers, who took home a combined $14.4 billion last year, includes businessmen who culled their wealth in part through fees charged to pensions and to manage money for the wealthy.
The annual ranking by AR Magazine, an industry publication, also includes managers who made millions even though the returns on their funds didn’t do much better than the overall S&P 500’s performance last year.
And in a year when the Occupy Wall Street movement protested inequitable wealth distribution, top hedge fund managers handling investments for the super-rich still found ways to make big money.
Take for example Ray Dalio, founder of Bridgewater Associates, who earned almost $4 billion mostly by betting on U.S. Treasuries, according to a TODAY report Friday by NBC senior investigative correspondent Lisa Myers.
“My customers are pension funds, teachers. I did well when others didn’t and I’m going to say that they are very grateful,” Dalio said in an interview with PBS.
Two years in a row, Dalio's firm earned more than Google, Yahoo, Amazon and Ebay combined, Myers found. And Dalio’s earnings were just considered “pretty good” by industry standards.
“The industry’s fees and performance are so out of whack it’s unbelievable,” Bradley H. Alford, a former hedge fund investor who now oversees a mutual fund firm told the New York Times. "Fifteen years ago, you got double-digit performance for those returns, but last year, the S&P was positive and hedge funds were negative. There’s no alignment with fees.”
Number 2 on the list, shareholder activist Carl Icahn, raked in $2.5 billion.
Number 3, James Simons, who owns a stake in the Renaissance Fund, earned $2.1 billion. Citadel hedge fund head Ken Griffin got $700 million.
Griffin has a taste for the good life, Myers found.
His wedding reception was held at the palace of Versailles. He owns at least four homes in the U.S. including a $17 million home in an exclusive Hawaiian resort. He donated an eponymously named wing to the Art Institute in Chicago.
Then there’s the pauper of the top five: Steve Cohen.
Cohen, head of SAC Capital Advisers, earned a comparatively paltry $585 million. He’s also a big spender.
He has a 35,000 square foot mansion, owns a piece of the Mets and his world-class art collection is worth millions.
There were some losers in the group. Last year’s standout star, hedge fund manager John Paulson, founder of Paulson & Co., is believed to have personally lost about $3 billion — losses partly attributed to his investment in a Chinese timber company later accused of fraud, according to the New York Times.
All these billionaires either declined to comment or did not respond to NBC's calls. The managers argue that, unlike some corporate CEOs, they only do well if their investors do well.
Dalio has pledged to give away at least half of his wealth to charity.
TODAY.com contributor Halimah Abdullah often reports on the influence of money on politics and policy.