THEY are just 40 financiers but if they founded a nation with their 2012 pay packets, it would have an economy roughly three times the size of Monaco’s.
The top 40 hedge fund managers personally earned a total of $16.7bn (£11bn) last year, according to Forbes research that underscores the extraordinary power of the high-rolling industry.
Michael Hintze of CQS Management, was London’s highest ranked hedge fund manager on the list. The Australian-born financier and philanthropist, who is also one of the Conservative Party’s biggest donors, earned $350m after generating 36pc returns on his flagship fund. Mr Hintze, who is a key sponsor of London’s Victoria & Albert Museum, has credited the Bank of England’s quantitative easing programme an crucial driver of the stock market rally.
But he was just number 11 on Forbes’ list. David Tepper who runs New Jersey-based Appaloosa Management earned $2.2bn, according to the research. Mr Tepper started buying shares in stricken banks, like Bank of America (Other OTC: BACYL - news) , at the apex of the financial crisis. His $15bn fund returned another 30pc last year boosting Mr Tepper’s reputation of being among the best investors of all time.
Mike Platt, founder of BlueCrest Capital Management, was the only other London-based fund manager in Forbes’ top 20. The former JP Morgan banker earned $225m. Alan Howard, co-founder of Brevan Howard, is listed at 21 with earnings of $200m. Mr Howard moved the hedge fund’s headquarters from London to Geneva in 2009.
The top five on Forbes’ list are all well-know veterans of the industry who together earned $7.8bn of the total.
After Mr Tepper, Carl Icahn, the 77 year old boss of Icahn Capital, is second on the list with earnings of $1.9bn. He is followed by Steve Cohen, 57, of SAC Capital Advisors who shrugged off a federal probe in insider trading, to generate 25pc returns and a $1.3bn payday for himself.
The “Quant King” James Simons of Renaissance Technologies earned $1.3bn too while George Soros, 82, earned $1.1bn. In January Mr Soros told The Daily Telegraph that the markets should bet against the pound. The pound has fallen 10 cents against the dollar since the start of the year.
The highest 10 managers earned a total of $11bn and included David Shaw of DE Shaw and Daniel Loeb of Third Point who recently made $500m on betting on Greek debt.
The performance of the best funds contrasts with an otherwise difficult year for hedge funds. Managers outside the “masters” category struggled during 2012. The HFRX, a widely used measure of industry returns, is up by just 3pc over the past year, compared with an 18pc rise in the S&P 500 share index. At the end of last year, SS&C, an American hedge fund administrator, said investors pulled money out of hedge funds faster than at any time since 2009.