Stephen Mandel of Lone Pine Capital LLC made hedge-fund investors the most money for the second straight year in 2013.
O. Andreas Halvorsen, who runs Viking Global Investors LP, and Appaloosa Management LP’s David Tepper ranked second and third in a study published today by LCH Investments NV in London. Mandel earned an estimated $5.2 billion for clients last year, Halvorsen made them $4.5 billion and Tepper $4.2 billion.
The firms benefited from winning bets on companies such as Priceline.com Inc., Goodyear Tire & Rubber Co. and Delta Air Lines Inc. that outperformed U.S. stock market indexes, regulatory filings show. The average hedge fund was less successful in 2013, as the $2.5 trillion industry trailed the Standard & Poor’s 500 Index for the fifth straight year.
Mandel, 57, and Tepper, 56, were also among the top hedge-fund managers in 2012, making $4.6 billion and $3.3 billion for clients, respectively.
Mandel is known as a Tiger Cub because he worked at Julian Robertson’s Tiger Management LLC before founding Greenwich, Connecticut-based Lone Pine in 1997. He has made $20.5 billion for his investors since inception, according to LCH. The profits include returns from “long-only” funds that don’t make bearish bets on companies, LCH said.
Halvorsen also worked at Tiger Management, then started his own firm in Greenwich in 1999.
Tepper, a former high-yield credit trader at Goldman Sachs Group Inc., said at the start of 2013 that stocks were due to surge because they were historically inexpensive, debt was overvalued and risks to the global economy had waned. His main hedge fund at Short Hills, New Jersey-based Appaloosa rose 42 percent last year, said a person with knowledge of the matter who asked not to be identified because the firm is private.
The investment fund that had the biggest gains in 2013 was Soros Fund Management LLC’s Quantum Endowment fund, which made $5.5 billion, according to LCH. Since its inception in 1973, Quantum has made $39.6 billion, more than any other firm, LCH said. George Soros, 83, decided in 2011 to return outside money in his hedge-fund firm to clients, turning the company into a family office.
John Paulson returned to form in 2013 by netting clients $2.6 billion, according to LCH’s report. Paulson, who became a billionaire in 2007 betting against the U.S. housing market, posted gains in 2013 ranging from 18 percent to 63 percent at several of his strategies, a person with knowledge of the matter told Bloomberg News last month.
Paulson, whose New York-based firm manages $20 billion, made $200 million for his clients in 2012 after losing almost $10 billion for them in 2011 when he had his worst investing year, according to LCH.
LCH’s annual report on how much funds made for investors after charging performance and management fees is based on discussions with the fund companies, audited reports issued by the firms and confidential sources. The total typically includes a manager’s investment in his own firm.
The LCH research on the 20 most profitable hedge funds ever shows the firms earned clients a net $55.4 billion in 2013. Among funds that underperformed their historical track records last year were two of the world’s biggest, Ray Dalio’s Westport, Connecticut-based Bridgewater Associates LP and Alan Howard’s Brevan Howard Asset Management LLP, said LCH, a firm overseen by the Edmond de Rothschild Group that invests in hedge funds.
Bridgewater’s $79 billion Pure Alpha fund generated gains of $2.4 billion, while Brevan Howard, based in St. Helier on the island of Jersey, made clients of its $28 billion Master Fund about $500 million in 2013, LCH said.
Representatives of the hedge funds declined to comment on LCH’s analysis or didn’t respond to inquiries.
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