The 10 Highest Paid Hedge Fund Managers

david tepper

Institutional Investor’s Alpha has released its 12th annual rich list, which ranks the top-earning hedge fund managers for the year. 

According to Institutional Investor’s Alpha’s analysis, the 25 highest earning hedge fund managers brought in a combined $14.14 billion in 2012. That’s the lowest total since 2008.

Fund managers are paid through a compensation structure commonly known as the “2 and 20”, which stands for a 2% management fee and a 20% performance fee charge. Those numbers can, however, vary from fund to fund. More specifically, two and 20 means hedge fund manager would charge 2% of total assets under management and 20% of any profits.

The fund managers also likely have their own capital invested in their funds so that would have to be taken into consideration when calculating their take home pay.

David Tepper, the founder of $12 billion-distressed-debt hedge fund Appaloosa Management, made it to the top of the list. There were four fund managers whose take-home pay was over a billion.

Daniel Loeb

Earnings: $380 million

Firm: Third Point LLC

Assets Under Management (AUM): $9.3 billion

2012 Highlights: In 2012, Loeb took on Yahoo!. In late 2012, he made $500 million profit off of a Greek Government Bond bet, according to the Financial Times. He also dumped his entire Apple stake in the fourth quarter of 2012, according to a securities filing.

Source: Institutional Investor's Alpha

David Shaw

Earnings: $530 million

Firm: D.E. Shaw (He no longer manages the firm's day-to-day operations)

2012 Highlights: D.E. Shaw's $9 billion flagship macro fund, Oculus, posted gains of more than 20% in 2012, according to Institutional Investor's Alpha.

Source: Institutional Investor's Alpha

Leon Cooperman

Earnings: $560 million

Firm: Omega Advisors

AUM: $7 billion

2012 Highlights: In the last quarter of 2012, Cooper dumped his Apple stake and disclosed a new stake in Facebook, according to a securities filing.

Source: Institutional Investor's Alpha

Stephen Mandel, Jr.

Earnings: $580 million

Firm: Lone Pine Capital

AUM: $23 billion

2012 Highlights: All of his funds ended up more than 22% net in 2012, according to Forbes.

Source: Institutional Investor's Alpha

Eddie Lampert

Earnings: $750 million

Firm: ESL Investments

2012 Highlights: ESL's 20% gain last year came from its big stake in Sears, which makes up 40% of the portfolio, and Gap, according to the New York Times.

Source: Institutional Investor's Alpha

Ken Griffin

Earnings: $900 million

Firm: Citadel

AUM: $14 billion

2012 Highlights: Citadel's flagship Wellington multi-strategy fund gained 25.5% in 2012, according to Reuters.

Source: Institutional Investor's Alpha

James Simons

Earnings: $1.1 billion

Firm: Renaissance Technologies (Simons retired from the day-to-day operations, but still has money invested in Ren Tec).

2012 Highlights: The quantitative funds' gains were mixed from a loss of 3.1% to a gain of more than 27% last year, according to the New York Times.

Source: Institutional Investor's Alpha

Steve Cohen

Earnings: $1.4 billion

Firm: S.A.C. Capital Advisors

AUM: $14 billion

2012 Highlights: SAC Capital, which has come under government scrutiny, ended up 12% in 2012, according to Reuters.

Source: Institutional Investor's Alpha

Ray Dalio

Earnings: $1.7 billion

Firm: Bridgewater Associates

AUM: $141 billion

2012 Highlights: Bridgewater's Pure Alpha was up 0.8% and its All Weather was up 14.7% in 2012, according to Reuters.

Source: Institutional Investor's Alpha

David Tepper

Earnings: $2.2 billion

Firm: Appaloosa

AUM: $15 billion

2012 Highlights: His fund ended up 30% in 2012. He made big bets on Apple, Citigroup and U.S. Airways, according to the New York Times.

Source: Institutional Investor's Alpha

Now let's get to know Tepper better...

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.