Apart from coronavirus, Hedge’s elite on the road to profits was not stopped by the Brexit scramble or the Black Lives Matter protests. The reason was the extreme volatility of stock prices, bonds or commodities, which created huge opportunities. But hedge managers also benefited from the huge support of central banks, which pulled world stock markets up sharply. Revenues for managers consist of fees for the management of funds, but also of the appreciation of their own funds, which they have invested in their own funds.
According to Hedge Fund Research, hedge funds as a whole valued investors’ money by 11.6 percent, which is their best result in a decade. However, they did not surpass the performance of US stocks, which strengthened by more than sixteen percent according to the S&P 500 index.
The rapid profits of billions of dollars illustrate the widening gap between the ultra-rich and the rest of the population when tens of millions of people have lost their jobs in the United States. This shows the detachment between the stock market and the real economy, Finance Professor Reena Aggarwal of Georgetown University told Bloomberg.
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Israel Englander, who runs Millennium Management, was the most successful last year. He made $ 3.8 billion. Englander was nineteenth among the top 25 managers in twenty years. Clients of Englander’s main fund, which brought a twenty-six percent appreciation, also came to their senses.
In second place was the legendary hedge manager James Simons, who earned 2.6 billion according to the rankings. This is mainly due to the phenomenal performance of the Medallion fund of 76 percent. However, only employees of Simons’ Renaissance Technologies company have money in the fund.
Other funds managed by Renaissance Technologies, which are open to investors outside the company but have failed. Losses exceeded thirty percent.
The trio is Tiger Global Management chief Chase Coleman, who raised $ 2.5 billion. A bet on the solar company Sunrun paid off.
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Perhaps the most remarkable story of last year, however, is that of Pershing Square Capital Management chief Bill Ackman, who made $ 1.4 billion.
Ackman believed that coronavirus posed a massive risk to the US, the US economy and world markets. He therefore secured his $ 6.5 billion equity portfolio against the adverse effects of coronavirus.
He paid $ 27 million to protect his portfolio from collapsing, valued at $ 2.6 billion during the peak panic. This then helped him significantly improve the value of managed investments to 70 percent.
What is a hedge fund?It is a fund that is subject to less regulation and offers higher profits than mutual funds at the cost of higher risk. It strives to generate revenue even when financial markets are falling. Unlike mutual funds, it uses financial leverage to borrow money for investments or to bet on the fall in the prices of shares, commodities or, for example, bonds. Alfred Winslow Jones, a former editor of Fortune magazine, is considered the founder of modern hedge funds. The first fund was launched in 1949, using leverage and speculation about the fall of shares. He managed the money for investors until the early 1970s. |
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Ranking of hedge fund managers by income(billions of dollars) |
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| Name | Revenues |
Company |
| 1. Israel Englander | 3,8 | Millenium Management |
| 2. James Simons | 2,6 | Renaissance Technologies |
| 3. Chase Coleman | 2,5 | Tiger Global Management |
| 4. Kenneth Griffin | 1,8 | Citadel |
| 5.- 6. Steve Cohen | 1,7 | Point72 Asset Management |
| 5.- 6. David Tepper | 1,7 | Appaloosa Management |
| 7. Philippe Laffont | 1,6 | Coatue Management |
| 8. – 9. Ole Andreas Halvorsen | 1,5 | Viking Global Investors |
| 8. – 9. Scott Shleifer | 1,5 | Tiger Global Management |
| 10. Bill Ackman | 1,4 | Pershing Square Capital Management |
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