Rising markets lead hedge funds to huge profits

Rising markets lead hedge funds to huge profits

As the stock market surged in 2023, so did the fortunes of many of the world’s largest hedge funds.

The 20 best-performing hedge funds made $67 billion in profits last year, which they report in 2022, according to data released by LCH Investments, a so-called fund’s lifetime after fees. Ranks the top 20 firms based on profits. ,

This strong performance by elite financiers follows the rally in stock markets last year. The S&P 500, Wall Street’s most followed benchmark, set a record last week.

This has benefited hedge funds, especially those that make concentrated bets on individual stocks. Many people in the industry have invested heavily Among the “Magnificent Seven” tech stocks — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — however, some on Wall Street have become concerned about too many investors betting on a single company.

In some ways, the data reflects a growing divide between the industry’s top players and everyone else. The top 20 firms oversee only 19 percent of the industry’s $3.5 trillion assets under management, yet they represent 46 percent of the sector’s total lifetime profits.

Topping the list for 2023 performance was TCI, an activist hedge fund run by financier Christopher Hohn, which reported a net profit of $12.9 billion. Other top performers last year include Citadel, DE Shaw, Millennium and Elliott Management.

Big firms that reported losses last year include Bridgewater Associates, the firm founded by outspoken billionaire Ray Dalio, and Caxton Associates.

Returning to the top 20 based on lifetime returns in the latest rankings is William A. Pershing Square Capital Management, the firm run by Ackman, is perhaps most famous for recently calling for the resignations of the presidents of MIT, Harvard, and the University of Pennsylvania. Over concerns about handling anti-Semitic acts on campus.

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