markets

Lone Pine, Egerton Make $9 Billion as Stock Bets Pay Off

Updated on

Stephen Mandel’s Lone Pine Capital and John Armitage’s Egerton Capital made a combined $9.2 billion for their investors last year by betting big on stocks, according to a report by LCH Investments that ranks hedge funds on the money they’ve made since their inception.

These funds topped LCH’s list for 2017, followed closely by Viking Global Investors and TCI Fund Management. There were losers, too, including big names such as Caxton Associates and Brevan Howard Asset Management, as some big firms “tend to avoid having a directional bias to equities, thereby missing out” on the stocks boom, said LCH Chairman Rick Sopher.

Hedge funds are increasingly back in favor with investors, who poured in $9.8 billion last year, compared with $70.1 billion of outflows in 2016, HFR data show. Stocks continue to touch record highs around the world as central banks pump cheap money into the economy, prompting concerns of a bubble that’s ripe to burst.

Billionaire Ray Dalio’s Bridgewater Associates was the most lucrative firm in absolute terms since it started trading in 1975, but last year it only made investors $300 million, falling behind 15 other managers.

London-based Egerton and TCI entered LCH’s top 20 for gains since inception for the first time. Both managers “boldly invested with a significant net-long bias since the global financial crisis, not only capturing the opportunities provided by rising equity markets but generating further gains through exceptionally good stock selection,” Sopher said in the report.

The top 20 hedge funds made about $38.7 billion after fees in 2017, while the industry as a whole gained $181.5 billion, representing “a significant improvement in overall performance compared to the prior three years,” Sopher said.

On average, hedge funds gained 8.3 percent last year, according to Eurekahedge data, lagging the S&P 500 Index’s return of 21.8 percent, including reinvested dividends.

FirmAssets
($ Billion)
Net Gains Since Inception
($ Billion)
Net Gains
in 2017
($ Billion)
Year of Inception
Bridgewater119.949.70.31975
Soros Fund Management2743.92.11973
Citadel27.128.63.41990
Lone Pine15.927.251996
DE Shaw2727.11.81988
Baupost29.7271.71983
Och Ziff31.9262.91994
Viking22.42641999
Appaloosa16.525.421993
Elliott Associates34.924.32.51977
Farallon23.921.42.51987
SAC/Point 721221.11.31992
Millennium35.520.62.41989
Moore Capital11.518.401990
Paulson & Co8.618.1-0.41994
Brevan Howard9.717.9-0.52003
King Street Capital1915.71.11995
Egerton18.914.74.21995
Caxton Associates5.814.7-1.11983
TCI17.514.23.52004

*Source: LCH

(Updates with overall hedge fund performance in last paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE