When it comes to pure
wealth creation — arguably the biggest motivation for the majority
of hedge fund managers — times have never been better. Thanks to
the power of hedge fund math, driven by management fees and
performance incentives, more managers are making more money today
than ever before, as evidenced by Institutional Investor's Alpha
This time there are
two who break the billion-dollar barrier: James Simons
of Renaissance Technologies Corp. and BP
Capital Management’s T. Boone Pickens.
In 2005 math whiz Simons earned a staggering $1.5 billion and oil
tycoon Pickens took home an equally astounding $1.4 billion.
Rounding out the top five are three longtime managers: Soros
Fund Management’s George Soros, $840
million; SAC Capital Advisors’ Steven
Cohen, $550 million; and Tudor Investment Corp.’s
Paul Tudor Jones II, $500 million.
The cost of admission
keeps going up. A manager had to earn at least $130 million in 2005
to qualify for a place among the top 25 money earners, compared with
$100 million in last year’s survey and just $30 million in 2001
and 2002. The 26 managers on the list made, on average, $363 million
in 2005, a 45 percent jump from the $251 million the top 25 earned
in 2004. The median earnings also grew, jumping by a third, from
$153 million in 2004 to $205 million last year.