Hedge funds have made a relatively small number of people wildly wealthy. Bridgewater, believed by many to be the largest hedge fund in the world, manages $150 billion. Its founder, Ray Dalio, is among the richest people in the world.
In fact, several spots among the people on the Forbes 400 richest people list belong to hedge fund owners.
Very few Americans know what a hedge fund is. Investopedia defines the term as “actively managed investment pools whose managers use a wide range of strategies, often including buying with borrowed money and trading esoteric assets, in an effort to beat average investment returns for their clients.”
Hedge funds can bet in the wrong direction, which has put some out of business. Among the most famous examples of this is the imploding of Long Term Capital Management in 1998. Despite being founded by several of Wall Street’s most respected investors and Noble Price economist Robert C. Merton, the fund lost nearly $5 billion in a few months.
Several hedge funds made wrongheaded bets in the early months of the COVID-19 pandemic. November 2020 has been described as among the most difficult in history for these investors.
Almost every year, a few hedge fund investors shine and their owners make several hundred million dollars or more. Bloomberg tracks the wealth of many of these hedge fund founders and partners and picks the biggest winners.
Bloomberg reports that the 15 most successful hedge fund managers made a total of $15.8 billion last year. Some of these are perennial members of the hedge fund billionaire club. Once in a while, a winner appears out of nowhere. That happened last year: “The little-known hedge fund manager made an estimated $2 billion in 2021, mostly thanks to an 11-year-old wager on Avis Budget Group Inc., a bet that paid off handsomely as the stock soared 456%.” The fund was SRS Investment Management, run by Karthik Sarma.
The hedge fund winners list was topped by widely known manager Ken Griffin, whose firm is called Citadel. He made $1.5 billion last year. Griffin is known for his extravagant real estate holdings. His homes in New York, Chicago and Miami are worth in sum about $1 billion.
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