One year ago
called on our readers to ensure we considered the track
records of all the best-performing hedge fund managers as we
computed our annual awards, which measure risk-adjusted
returns. Citadel took home the top trophy; its Wellington Fund
won our award for fund of the year. Pine River Capital took
our award for management company of the year.
Who should top our list this year? We're now accepting
nominations for the 2013 Absolute Return Awards, which will be
presented in February 2014. Funds seeking a space on our roster
should report their performance to the Absolute Return database
and fulfill our
Five years ago
»» Sitting before a
Congressional hearing in Washington, DC., five of the
highest-paid hedge fund managers called for greater
scrutiny of their industry. George Soros of Soros Fund
Management, James Simons of Renaissance Technologies, Phil
Falcone of Harbinger Capital, and John Paulson of Paulson &
Co. agreed that funds should be required to disclose more
information on positions and leverage, as long as the
information was not made public. Only Ken Griffin of Citadel
was hesitant to endorse increased regulation, saying it wasn't
necessary, but admitting that the global financial system might
have become "too interconnected to fail."
These five managers represented the crème de la
crème of the hedge fund world at the time. The last five
years have been eventful for them-not positively in all
Harbinger Capital has shrunk from the $24 billion it managed
in the middle of 2008 to $3 billion as of midyear 2013,
according to the
Billion Dollar Club. Legal troubles certainly didn't help.
In August, Falcone agreed to a
five-year ban from the securities industry after the U.S.
Securities and Exchange Commission accused him of "serious
misconduct that harmed investors." Falcone was accused of using
investor money to pay his taxes and giving some clients
preferential treatment when returning invested capital.
Both Soros and Simons have since left the industry: Soros by
returning capital to investors, and Simons by
retiring and handing the reins to Peter Brown and Robert
Mercer. Soros's fund, with $17 billion in assets in 2008, was
mostly his personal fortune, so that even after returning
capital his family office has grown to an estimated $24
billion. Assets managed by Renaissance Technologies fell from
$34 billion in midyear 2008 to $24 billion five years
After earning outsized returns on the subprime housing trade
that inspired the The Big Short and The Greatest
Trade Ever, Paulson & Co. has struggled; the firm's
flagship Advantage Fund suffered double-digit losses in 2011
and 2012, though it returned
9.45% in the third quarter of 2013, putting it up 11.01%
for the year. With $16.75 billion under management as of
midyear, the firm remains well below the $34.94 billion in
assets it commanded in mid- 2008.
Ironically, Paulson has railed against the regulation he
appeared to endorse in 2008. In 2012, he called the U.S.
Securities and Exchange Commission's new hedge fund reporting
a complete waste of time."
Meanwhile, Citadel has been the hedge fund world's comeback
kid. It had
$20 billion under management in mid- 2008. By the end of
the year, it had
lost $7 billion in assets and its Kensington and Wellington
funds were down 53%. In December 2008, Absolute Return
whether Citadel could ever recover.
Although it now manages about three quarters ($15 billion)
of the assets it managed five years ago, Citadel has since
generated impressive returns for investors, with the firm's
winning the Absolute Return Fund of the Year Award in