A few months ago I had posted on the Predictive Analysis thread of how James Simmons a Maths Whiz was making a killing in the Hedge Fund Industry.This year too he tops the list with an eye popping $ 1.7 Billion in earnings !!!
http://www.iht.com/articles/2007/04/23/business/hedge.php?page=2
Hedge fund managers leading in race for riches 
By Jenny Anderson and Julie Creswell
Published: April 23, 2007
NEW YORK: James Simons, 69, is a publicity shy math professor who uses complex computer-driven models to make bets on stocks, bonds and commodities, among other things.
His earnings last year? An astounding $1.7 billion.
As one of the leading hedge fund managers, Simon gets a paycheck that dwarfs those of the top chiefs on Wall Street. The highest paid on the Street, Lloyd Blankfein of Goldman Sachs, earned $54.3 million last year.
Simons is not the only member of the hedge fund billionaires club.
Kenneth Griffin and Edward Lampert each took home more than $1 billion last year, with George Soros missing the hurdle by a hair, give or take $50 million, according to an annual ranking of the top 25 hedge fund earners by the Institutional Investor's magazine, Alpha.
With the modern gilded age in full gear, hedge fund managers and their private equity counterparts are comfortably seated atop one of the most astounding piles of wealth in U.S. history. Their ascendancy has been aided by easy credit, robust markets and a fee structure that can produce staggering amounts of individual wealth.
Naturally, some look upon these masters of the new universe as this generation's robber barons, using wealth to create wealth, often in secretive ways, and leaving little that is tangible in their wake. Others view them as new economy financiers, evolving the likes of John Rockefeller or John Pierpont Morgan to provide liquidity to the markets and broadly diversify risks in the banking and financial systems.
"You had railroads in the 19th century which led to the opening up of the steel industry and huge fortunes being made," said Stephen Brown, a professor at the New York University Stern School of Business. "Now we're seeing changes in financial technology leading to new fortunes being made and new dynasties created."
But as hedge funds and their private-equity brethren begin to emerge more onto the public stage, playing increasingly bigger roles in art and cultural venues, tiptoeing into the Washington lobbying game, and even selling shares of their own firms to the public, all aspects of their activities, their own compensation in particular, is beginning to raise eyebrows.
"There is some question as to what the heck they are doing that is worth 2 percent of the assets and 20 percent of the profits," said J. Bradford DeLong, an economist at the University of California, Berkeley. "The answer is darned mysterious."
Indeed, to some, it is difficult to see the value created by a hedge fund that bets billions of dollars on movements in everything from global currencies, stocks and bonds to real estate, reinsurance and complex credit derivatives. Yet many, including past and current Federal Reserve Board chiefs, argue that they are greasing the wheels of capitalism, mitigating risk and increasing liquidity.
Recently, for instance, the U.S. House Financial Services Committee held hearings focusing on the potential risks to pensioners and the financial system caused by hedge funds.
While the debate rages, the new financiers are collecting piles of money not seen since the heady days of the Internet boom. But unlike the wealth of many of the dot-com billionaires, who saw their fortunes rise and collapse with the technology bubble, the hedge fund gains were not paper returns, but huge payouts, which most managers then reinvested in their funds, betting that they would continue to beat the markets.
Still, the performance of these managers is as varied as their strategies, ranging from complex computer models to the more old-fashioned version of betting the farm on a few stocks.
For its rankings on compensation, Alpha magazine includes the managers' share of the firm's management fees, and performance fees, or a share of the profit, which typically starts at 20 percent.
That structure means that some hedge fund managers can still earn a huge income even with mediocre returns because of the huge size of the assets under management. Raymond Dalio, head of Bridgewater Associates, which has more than $30 billion in hedge fund assets, for example, took home $350 million last year even though his flagship Pure Alpha Strategy fund posted a return of just 3.4 percent for the second consecutive year.
The magazine also includes gains made on hedge fund managers' own capital in their funds. Simons, for instance, has more than $1 billion of his own money invested in his funds.
At the top of Alpha's list for the second consecutive year, Simons, a former code breaker for the U.S. Defense Department, uses computer-driven models to detect pricing anomalies in stocks, commodities, futures and options. Even though he has some of the highest fees in the business - 5 percent of assets under management and 44 percent of profit - he trounces most of his competitors year after year. In 2006, the $6 billion Medallion fund posted gross returns of 84 percent; 44 percent after fees, explaining his $1.7 billion take away.
Some investors don't blink at paying those startling fees. "If you pay peanuts, you get monkeys," said Jim Dunn, a managing director with Wilshire Associates which, advises on investing in hedge funds.
While Simons makes his mark using algorithms, the two other billionaires on the Alpha list are building distinctive institutions. Griffin's Citadel Investment Group of Chicago is often cited as a budding Goldman Sachs, and Griffin himself is playing an increasingly public role in Chicago, with causes ranging from art to education. Citadel employs 1,000 people, more than half in technology. Griffin's funds, with returns of more than 30 percent, helped net him a nifty $1.4 billion.
Compare that with the elusive Lampert, who has $11 billion of his $14.6 billion ESL fund in the retailer Sears. Last year, Sears stock rose, and with it, Lampert's fortune, by about $1.3 billion.
And if the Internet age was defined by youth, the hedge fund age illustrates that experience pays.
The average age of Alpha's top 25 was 51, with only four 30-somethings on the list. Among them is John Arnold, 32, from Centaurus Advisors, who amassed net gains of 200 percent last year.
Arnold hails from the Enron energy desk, where he received a lifetime of trading and other experiences. His $3 billion fund, among the largest energy funds in the world, racked up huge gains by taking the other side of a natural gas bet that caused Amaranth to lose more than $6 billion in a week.
But it was some older, more familiar names that populate Alpha's list. T. Boone Pickens, the 78-year-old oil tycoon, made $340 million on the back of strong returns at his energy funds. Carl Icahn, 71, the reborn activist investor, made $600 million.
With a greater proportion of the assets in the hedge fund industry controlled by fewer managers, some investors worry that managers are at a turning point. The same young and brash managers who achieved huge successes are now controlling vast sums of assets and the incentive may be to protect their wealth, rather than take risks to increase it.
"I think one of the significant issues of this business that we are all struggling with is that there is an inverse correlation between compensation and drive," said Mark Yusko, president of Morgan Creek Capital Management, an investment advisory firm. "In many cases the incredible wealth that is created by this incentive compensation structure has a propensity to dull the senses and dull the drive."
................What we can notice is that our cute Photon has just now met some anti-photon.or groan2photon
) post there...
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