People love lists and more specifically they love rankings. Journalists know this. Thus, in hedge fund land, we are treated to endless lists of who makes how much, which hedge fund firms are the biggest, which managers deliver the best returns, who took in the most money, who lost the most money. Some of these lists are of a higher quality than others. You readers of these lists know what I mean â€“ some are little more than speculation while other are meticulously researched and documented.
Both kinds get loads of media attention, mostly because, although we deny it, we seem to be fascinated with how much money other people make and how successful (or unsuccessful) they are. We love to see the high brought low and get our indignation on at the eye-popping paychecks some in this industry regularly collect.
All of which is a way of backing into the latest ranking, from Pensions & Investments, of hedge fund assets. In its story accompanying the chart, P&I pointed out that three firmsâ€”Goldman Sachs Asset Management, Renaissance Technologies Corp. and Citadel Investment Groupâ€”lost enough in assets during 2009 to fall below $20 billion in assets, the cutoff for making the newspaper’s list.
Four other firmsâ€”Brevan Howard Asset Management LLP, Baupost Group LLC, Soros Fund Management LLC and Man Group plcâ€”exceeded the $20 billion threshold to make P&I’s list.
J.P. Morgan was the largest hedge fund manager, with $53.5 billion in assets as of Dec. 31. That amount was divided between J.P. Morgan Asset Management and Highbridge Capital Management LLC.
Farallon Capital Management LLC saw 42.5% of its assets disappear, according to P&I. Goldman Sachs’ assets fell 45.2%, dropping the firm from sixth place in 2008 to off the list last year.
P&I also found that institutional assets managed by the top 11 firms fell by 22% to $151 billion. What to make of that? Some institutions probably moved money to smaller firms as they got more comfortable with the space, while others pulled money out of hedge funds as a strategy. But by and large, P&I found, institutions appear to prefer the larger hedge fund managers, which isn’t surprising. What’s that old adage? Nobody ever got fired for buying IBM stock? Same deal here, as P&I pointed out.