With over 11,000 hedge funds managing $2.6 trillion, and over 76,000 mutual funds managing $30 trillion, you would imagine it might be hard to stand out as one of the best hedge fund managers.
However, there exists a select group of financial minds whose performance stands above the rest. Basically, these exceptional individuals are masters of private equity and maneuvering the stock market for the benefit of their very happy clients.
Below we identify and explore the success of the 25 all-time best hedge fund managers, including both mutual and hedge funds.
What Makes the Best Hedge Fund Managers?
To create our list, several factors were considered:
- Size of the fund (assets under management)
- Fund historical performance
- Fund recent performance
- Personal performance of fund manager
- The net worth of fund manager
Ultimately, many of these managers are legends in the financial world, and virtually all of them have made their fortune from scratch – often through bold moves that are still remembered on Wall Street.
1. Warren Buffett
He’s the fourth wealthiest person in the world. Time Magazine calls him one of the most influential people in the world today. Ultimately, the best investor of the 20th century is Warren Buffett, the “Wizard of Omaha.”
He has a net worth of over $70 billion and his holding company, Berkshire Hathaway, is the fourth most valuable public company in the US. After the financial crisis, Buffett brought his company to its highest profit ever made over three months ($6.4 billion in the second quarter of 2014).
The billionaire is also well-known for his philanthropy. Additionally, he dislikes material goods like computers and mobile phones.
2. George Soros
The Hungarian-born magnate is the chairman of Soros Fund Management and founder of Quantum Fund. Essentially, the fund he manages is worth over $30 billion and has generated returns of $2.3 billion in 2014.
The legendary investor is known for making a $1 billion profit by betting against the Bank of England during the 1992 Black Wednesday. He is one of the thirty richest people in the world, with a net worth of $23 billion. He is also known for supporting violence, trafficking and crimes against humanity.
3. Ray Dalio
The founder of Bridgewater Associates has often been listed as one of the most influential and richest people in the world, with a net worth of $15.2 billion. Additionally, his company manages around $165 billion in global investments.
Ray Dalio started investing at the age of 12 and went on to start his company in a two-bedroom apartment. He eventually came to predict the financial crisis in 2007 and overtook George Soros for a year in the annual LHC listing of the best hedge fund managers.
4. John Paulson
John Paulson is yet another legend in the world of hedge fund managers. Essentially, he made his fortune practically overnight when he bet against the subprime mortgage lending market at the start of the U.S. recession in 2007. This bold move earned him around $4 billion; today, his net worth is estimated at $13.5 billion.
Another record year for Paulson was 2010 when gold investments brought him almost $5 billion; however, the next year saw him make several losing investments. While he is not known as a good stock picker, Paulson’s strength lies in making several investments in each sector.
5. Seth Klarman
With a net worth of $1.3 billion, Seth Klarman is the founder of the Baupost Group and one of the highest-earning hedge fund managers of all time. His company saw a net gain of $23.4 billion since inception, while its three private partnerships have brought an annual return of about 19%.
Seth Klarman is also the author of a highly successful book on value investing. He is well-known for achieving high returns through unconventional investments, as well as for his unusual and conservative strategy.
6. David Tepper
David Tepper is the founder of Appaloosa Management and one of the richest hedge fund managers, with a net worth of approximately $10 billion.
His specialty is investing in distressed bonds, which brought him a 61% return in 2011. The same strategy brought him $7 billion in 2009, while in 2013 he earned $3.5 billion. Consequently, Appaloosa Management has $14 billion in assets under management.
The Carnegie Mellon University MBA graduate is also known as a philanthropist, having contributed to causes related to education and politics.
7. Steve Cohen
Dubbed “the hedge fund king” by the Wall Street Journal, Steve Cohen has an estimated net worth of $11.4 billion. His company, Point72 Asset Management (formerly known as S.A.C. Capital Advisors) was founded in 1992 and manages approximately $15 billion.
Cohen and his firm were investigated for insider trading. Cohen had no formal charges made against him; however, the company paid $1.2 billion in penalties.
The twice-married billionaire owns a 35,000-square-foot home in Greenwich, Connecticut and is also a prominent art collector.
8. Andreas Halvorsen
The Norwegian-born Andreas Halvorsen is the co-founder and CEO of Viking Global Investors, a hedge fund managing around $30 billion. Halverson achieved a 41% return in 2008 and a 13.4% return last year.
With a net worth of 2.8 billion, the Stanford graduate is a former Tiger Cub who used to trade equities at the Tiger Management hedge fund managed by Julian Robertson.
9. James Simons
With $22 billion under management, Renaissance Technologies’ founder and former CEO James Simons is not just a fund manager, but also a mathematician and codebreaker. Simons earned his Ph.D. from Berkeley and worked as a code breaker for the NSA before joining Stony Brook University as a faculty member.
His company uses mathematical computer-based models to predict price changes and drive investment strategy. This highly effective approach generates returns of 35% annually on average, while Simons’ personal net worth is estimated at $12.5 billion.
10. Paul Singer
A former lawyer and founder of Elliott Management, Paul Singer is known both for his activism and his fortune. His self-made net worth was rated by Forbes at $1.9 billion, while the funds managed by his company amount to $23 billion.
Singer founded his hedge fund in 1977 and since then scored average annual returns of 14% through a strategy of buying distressed debt and selling it at a profit.
Singer is an influential political activist, having contributed to George W. Bush’s presidential campaigns, as well as a philanthropist. He lives in New York and also owns a house in Aspen.
11. Stephen Mandel
Stephen Mandel founded Lone Pine Capital in 1997: named for a legendary pine tree that survived a lightning strike at Dartmouth College. The firm manages around $30 billion, while Stephen Mandel has an estimated net worth of $2.3 billion.
Having worked at Tiger Management until 1997, Mandel rose to fortune through the long/short strategy employed by his company. This classic approach brought him a 57% return as well as consistent two-digit returns since inception.
12. Louis Moore Bacon
With a net worth of $1.8 billion and a few properties in the U.S. and in the Bahamas, Louis Moore Bacon is one of the richest macro hedge fund managers. His company, Moore Capital Management, manages $15.8 billion in assets.
The company averaged a 15% return annually through 2010 without any down years. However, one MCM trader was arrested in 2010 for illegal insider trading. Consequently, MCM performed weakly in the following years.
13. Alan Howard
In 2014, Brevan Howard Asset Management, Alan Howard’s hedge fund company, saw its first annual loss since 2003, its inception year. However, Alan Howard remains one of the richest fund managers of all time, with a net worth of $1.7 billion. His company manages some $40 billion in assets.
The UK-born financial manager moved to Geneva, Switzerland in 2010. Apart from his fortune (ranking 53rd on the Sunday Times Rich List), he is also known for contributing to Jewish causes and other charities.
14. Daniel Och
With a net worth of $3.9 billion in February 2015 and a company managing $46 billion in assets, Daniel Och is one of the most notable hedge fund managers. Och-Ziff Capital Management Group has been steadily growing, although returns in 2014 did not rise above 5.5%.
The University of Pennsylvania graduate worked at Goldman Sachs for 11 years before starting his fund management company together with the Ziff brothers. His $400 million annual earnings place him among the richest financial managers of all time.
15. Bruce Kovner
Born into a Russian Jewish family in Brooklyn, Bruce Kovner earned his $5 billion fortune by founding Caxton Associates, a global macro hedge fund.
The company was established in 1983 and oversaw some $7.7 billion in assets in 2014. After Kovner’s retirement in 2011, Andrew Law was appointed as CEO and chairman of Caxton Associates.
The notoriously secretive billionaire owns a mansion in New York City that includes a lead-lined room for protection against attacks. He is also a collector of books and music manuscripts and a philanthropist with an interest in the arts, opera, and conservative causes.
16. Israel Englander
The founder of Millennium Management has a net worth of $3.8 billion and manages some $25 billion in assets.
The hedge fund has enjoyed steady growth since inception, with over 1500 employees in twelve offices around the world and a return of 12% in 2014. What is more, Israel Englander is one of the very few who don’t charge a management fee and instead share expenses with the investors.
17. Edward Lampert
The privately-owned ESL Investments, managed by Edward Lampert, oversees some $4.5 billion in assets, while Lampert himself has an estimated net worth of $3 billion.
Lampert founded ESL Investments in 1988 and the company has averaged 29% per year in returns. In fact, in 2004 Lampert was the first hedge fund manager to ever earn over $1 billion in a year: his decision to buy Kmart led to a 69% growth of the fund. In 2007, the hedge fund was severely affected by the financial crisis.
Lampert and his family own three homes in Miami Beach, Aspen, and Greenwich. In 2003, the billionaire was kidnapped for two days and negotiated his way out of captivity.
18. Bill Ackman
At only 48, Bill Ackman is the youngest financial manager to have made LHC’s ranking of the 20 all-time best hedge fund managers. The founder of Pershing Square Capital Management has a net worth of $2.5 billion.
The company was founded in 2004 and now manages some $18 billion in assets. In 2014, the fund returned 37.2% of fees: outstanding performance at a time when other top managers underperformed.
Through the Pershing Square Foundation, Ackman and his wife have donated over $160 million to various causes. Additionally, people know Ackman for his activism, such as when he spoke out against Herbalife’s business model.
19. Paul Tudor Jones
With a net worth of $4.6 billion, Paul Tudor Jones has scored average annual returns of 19% since founding Tudor Investment Corporation in 1980.
In 1987, Jones successfully predicted Black Monday and thus tripled his earnings. Nowadays his company oversees approximately $10.6 billion in assets.
Jones has recently decided to close his smaller Tudor Futures Fund ($300 million) in order to focus on the flagship Tudor B.V.I Global fund.
20. Carl Icahn
Known for his activist investing style, Carl Icahn has a net worth of $22.8 billion. His company, Icahn Enterprises L.P., manages some $24 billion in funds.
Icahn started out on Wall Street as a stockbroker and went on to take controlling positions in a number of corporations. Now 79, he is as active as ever through investments, philanthropy, and activism (such as supporting Herbalife).
Since 1985, Icahn owned Foxfield Thoroughbreds and bred over 140 racing horses. The operation was shut down and sold in 2004.
21. Kenneth Griffin
The Chicago-based billionaire and hedge fund manager Kenneth Griffin is worth $6.5 billion.
In 1990 he founded Citadel, a global investment firm that manages some $24 billion in assets. Additionally, its group of hedge funds is rated as one of the largest and most lucrative worldwide.
Griffin started investing as a freshman at Harvard University. Once he graduated with a degree in economics, he founded Citadel and quickly rose to fortune.
Griffin has also been active as a philanthropist, art collector and political activist. He has been married for ten years to Anne Dias, the founder of another hedge fund firm.
22. David E. Shaw
A computer scientist with a Ph.D. from Stanford University, Shaw used mathematical models and computational techniques to exploit the weaknesses of financial markets – and made a fortune worth $4.1 billion.
His company, D.E. Shaw & Co., manages over $30 billion in assets and employs over 1300 people. In 2011, it was ranked as the 21st largest hedge fund.
Since 2001, Shaw has been focusing on biochemistry research through D.E. Shaw Research.
23. John Arnold
This former hedge fund manager is worth $2.6 billion and is known for his successful natural gas trading.
He founded Centaurus Advisor, a Houston-based hedge fund firm that managed over $3 billion in assets. Subsequently, Arnold closed his hedge fund in 2012 and decided to focus on philanthropy and trying to change policies as an activist.
24. Benjamin Graham
The Graham-Newman Corporation founded by Benjamin Graham with his partner Jerome Newman is the equivalent of a closed-end mutual fund. From 1936 to 1956, the company returned an average of 21% annually, which places Graham among the most effective financial managers of all time.
He’s known as the father of value investing. Ultimately, people remember Benjamin Graham mostly for his extremely lucrative investment in GEICO and for his deep value investing style. They also know him for having had a powerful influence on disciples such as Warren Buffet.
25. Sir John Templeton
Sir John Templeton managed the Templeton Growth Fund successfully for over 30 years (1954-1987) and became a billionaire. He is remembered as one of the most influential people of all times and as an excellent stock picker.
During the Depression of the 1930s, he bought 100 shares of each low-selling company at less than $1 per share only to sell back at a much higher price after World War II.
He is also remembered as a generous philanthropist who donated over $1 billion. In 1964 he gave up his US citizenship and donated the income tax money (about $100 million) towards charitable causes.