A ranking of the world's largest hedge fund managers sharply illustrates the ravages the financial crisis wreaked on firms in the past two years.
It also shows how important assets from institutional investors are to the fortunes of many of these industry titans.
Pensions & Investments' list of the world's largest hedge fund firms — those with at least $20 billion as of Dec. 31 — shows that assets managed by the 11 companies totaled $316.2 billion, virtually the same as the $316 billion managed by the 10 hedge fund managers that made P&I's last ranking, based on data as of Dec. 31, 2007 (P&I, Feb. 4, 2008).
The flat growth disguises what clearly was a period of intense turmoil for many hedge fund managers, some of which were rocked by performance woes in the last months of 2008 and first few months of 2009, as well as by client redemptions.
The result is that the composition of the list of the hedge fund managers with more than $20 billion under management changed significantly:
•Hedge fund assets of three prominent firms — Goldman Sachs Asset Management, Renaissance Technologies Corp. and Citadel Investment Group — fell below the $20 billion cutoff, dropping the three from the ranking.
•Four hedge fund companies — institutionally-oriented Brevan Howard Asset Management LLP and Baupost Group LLC, as well as retail-focused Soros Fund Management LLC and Man Group PLC — joined P&I's list.
•In addition to the three firms that left the top manager list, three others remained above the $20 billion mark despite suffering asset declines ranging from 30% to 43%. The collective decline of these six managers over the two-year period was $74 billion.
To compile its list, P&I gathered information from hedge fund companies and industry sources. For a longer list of large hedge fund managers, available on www.pionline.com/hedgefunds, research also involved scouring Securities and Exchange Commission filings and press reports, and interviews with industry sources.
Holding its No. 1 ranking on the latest list was J.P. Morgan, which managed $53.5 billion in hedge funds as of Dec. 31 — $32.5 billion by J.P. Morgan Asset Management and $21 billion by Highbridge Capital Management LLC. This is an increase of 18.9% from J.P. Morgan's year-end 2007 total of $45 billion.
Bridgewater Associates Inc. remained in second place, with hedge fund assets of $43.6 billion as of Dec. 31. Bridgewater was among the hedge fund managers that showed healthy growth during the period, rising 21%.
Paulson & Co. Inc. increased assets 10% to end 2009 with $32 billion, pushing the firm up to third from eighth.
Filling the next three spots on the list are the three new firms: Brevan Howard and Soros, each with $27 billion; and Man Group, with $25.3 billion.