George Soros. Julian Robertson. Michael Steinhardt. Stanley Druckenmiller. Louis Bacon. Paul Tudor Jones II. Bruce Kovner. Arthur Samberg. These are the luminaries of the hedge-fund industry. None of them show up in what follows, however, as they’ve got nothing left to prove. Instead, we rank today’s best hedge-fund managers in six categories, based on a poll of ten industry insiders. Five are hedge-fund managers themselves. Two work with hedge funds in their positions at major investment banks. One invests in them. And two—the only ones who didn’t request anonymity—are journalists (Rich Blake of Trader Monthly and Michelle Celarier of Absolute Return). Three of our eight anonymous panelists agreed to provide additional thoughts on the managers in the following pages. Behold the new Establishment.
SAC Capital Advisors
Size: $12 billion
Location: Stamford, Conn.
Most talked-about hedge-fund manager. Lives in a 32,000-square-foot house on a fourteen-acre estate in Greenwich. Is building what could be the great contemporary-art collection of our time. Recently purchased Willem de Kooning’s Police Gazette from David Geffen for $63.5 million. Net worth estimated at $3 billion.
Old Hand: “Came out of nowhere. He’s a terrific trader, and very intense.”
Hedge-Fund Investor: “The next wave of stars in the hedge-fund world will be those portfolio managers who come out from under Cohen’s wing.”
Young Buck: “Likely the largest trader by volume in the world. And most of the assets of the firm are his own!”
Size: $19.15 billion
Style: Distressed investor
Worked at Drexel Burnham Lambert in the Milken era. King of the vulture investors—currently sniffing around car-company wrecks in Detroit. Likes Republicans: Dan Quayle is on Cerberus team; former Treasury secretary John Snow is chairman.
Old Hand: “One of the great activists.”
Hedge-Fund Investor: “A quiet, almost antisocial guy who is a machine at investing. He’s morphing [Cerberus] from being a distressed hedge fund into almost a buyout firm.”
Young Buck: “The top name in distressed, middle-market, and private deals.”
Size: $5.3 billion
Style: Distressed investor
Location: Chatham, N.J.
Ran the junk-bond desk at Goldman. Joined ever-growing roster of ex-Goldmanites after founding Appaloosa in 1993. Like Cerberus, lurking around automotive industry. Worked with Cerberus on the Delphi automotive deal. Estimated net worth of $1.5 billion.
Old Hand: “As much an activist investor as a distressed one.”
Hedge-Fund Investor: “Great numbers, but very volatile. He gave so much money to the business school at Carnegie Mellon that they named it after him.”
Young Buck: “The preeminent distressed investor of the past ten years.”
Size: $18 billion
Style: Stock picker
Location: Greenwich, Conn.
Once kidnapped. Called greatest investor of his generation. A leader among activists, he focuses on retail, and owns Sears (which owns Kmart) and AutoNation. With estimated net worth of $3.8 billion, the richest man in Connecticut, which is saying something.
Old Hand: “Lampert gets his fingernails dirty by managing the companies he invests in. He’s got no known hobbies, but he’s a terrific guy.”
Hedge-Fund Investor: “He’s turning Sears into the next Berkshire Hathaway. And he’s becoming the next Warren Buffett in the process.”
Young Buck: “Takes highly concentrated control positions in the companies he invests in.”
Citadel Investment Group
Size: $13.5 billion
Used to be one of the most secretive guys. But since he decided to raise money for his firm by selling bonds last year, he’s warmed to the press, which happened to notice that Griffin took big profits in last year’s Amaranth meltdown. Purchased Jasper Johns’s False Start from David Geffen for $80 million. Net worth estimated at $1.7 billion.
Old Hand: “Griffin started trading in his Harvard dorm room at Cabot House.”
Hedge-Fund Investor: “He got married at Versailles.”
Young Buck: “A tough boss with high expectations.”
Fortress Investment Group
Size: $4.6 billion
A president of Fortress, Novogratz cashed in with colleagues Peter Briger and Wesley Edens when the firm went public earlier this year. Like many on these lists, he got his start at Goldman Sachs. Was a helicopter pilot in the U.S. Army. Net worth estimated at $2.3 billion.
Young Buck: “Gotta love that Fortress stock price.”