ray dalio picture

Ray Dalio is the famous manager of the largest hedge fund in the world, Bridgewater.  Last year, he personally made $3.9 billion and his flagship fund, Pure Alpha, saw $13.8 billion in profits for investors last year.

This spectacular return has placed him at the top of the list for the twenty five richest hedge fund managers by Absolute Return magazine.  It should be noted that four of the top five manages made money from funds that were closed to new investors and investors in Citadel, the fund ran by fourth placed Ken Griffin, saw losses recovered from the financial crisis in January, finally.

The average payday was $576 million, down from $880 million in 2010, which was not a very good year for hedge funds because the average fund was down 2%.  In other statistics, Dalio made 480 times what Bank of America CEO, Brian Moynihan made last year ($8.1 million).  Larry Fink, CEO of Blackrock, is one of the highest paid executives in the financial industry with his 2011 payment of $22 million.

Going back to Dalio and Bridgewater, they manage $70 billion in the Pure Alpha fund and $50 billion in a fund that us primarily for pension funds.  He has also signed the pledge to donate half his net worth to charity.

Carl Icahn made $2.5 billion after being forced to return some investors’ money earlier in the year.  James Simons, manager of the Renaissance Technologies hedge fund, saw $2.1 billion in compensation.

Hedge fund managers are paid very well but they some have slipped in recent years and it has been difficult to get back into the “black” since the financial crisis.  Look at John Paulson, great manager but has been struggling to get his performance numbers up.  Paulson was not listed in the rich managers list.

Hedge funds, however, have recouped a lot of losses with the rally of 2012.  A lot of funds have been able to erase 2011 losses with just the first three months of this year.  Don’t get fooled, this rally is definitely cooling off and I suspect a correction is in the near future.  Once we start to see some down days, we will see accelerated selling to avoid losing winners.  Once this market comes down a bit, I will be jumping in and picking up some cheap stocks and so will hedge funds.