Top hedge fund manager reaped $3.7 billion in 2007 /
April 17, 2008 -- Bloomberg News -- John Paulson, founder of New York-based Paulson & Co., was paid an estimated $3.7 billion last year, the most in the hedge fund industry, according to Institutional Investor's Alpha Magazine.
Paulson, 52, surpassed George Soros and 2006's top earner, James Simons, in a ranking of the 50 highest-paid hedge fund managers. Soros placed second, earning about $2.9 billion. Simons was third, making an estimated $2.8 billion last year.
Ken Griffin of Chicago-based Citadel Investment Group ranked fifth, earning $1.5 billion, the magazine estimated.
Paulson & Co., which oversees about $28 billion, made money betting on the collapse of subprime mortgages in 2007. The Paulson Credit Opportunities Fund soared almost sixfold, helped by bets on slumping housing and subprime mortgage prices, according to investor letters obtained by Bloomberg.
Average compensation for the top 25 fund managers was $892 million in 2007, up 68 percent from the previous year. The minimum compensation included in the ranking was $210 million, Alpha said.
Those salaries may be a high-water mark for the $1.9 trillion industry, which had its worst start in nearly two decades this year. Hedge funds lost 2.8 percent in the first three months after gaining 10 percent in 2007, according to Chicago-based Hedge Fund Research Inc.
Hedge fund managers make most of their compensation by keeping a percentage of profits, typically 20 percent. They get no performance fees unless their return is positive, but typically keep a 2 percent management fee.
Five of the managers on Alpha's list of 25 best-paid managers in 2006 didn't make it in 2007 because their funds underperformed or lost money. Edward Lampert, who is now chairman of Hoffman Estates-based Sears Holdings Corp., didn't make the list because he lost money in 2007, according to Alpha. |
