Record Pay For Hedge Fund Managers In 2009 (GLD, AU)

The incredible rally in equity and credit markets in 2009 has translated into some jaw-dropping earnings figures for the world's top hedge fund managers. In fact, it is a record. The top 25 managers brought in a collective $25.3 billion. These figures include both the estimates of each money manager's portion of fees as well as the increased value of their personal stakes in their funds.

Leading the way was David Tepper, who runs Appaloosa Management. He earned an estimated $4 billion betting that the government would not let the country's biggest banks fail. Mr. Tepper said, "We bet on the country's revival, those who keep their heads while others are panicking usually do well." Appaloosa's investors didn't do too bad either, as the fund gained more than 130% last year.

George Soros' haul of $3.3 billion put him in second place on the list. His Quantum Endowment fund grew by 29% in 2009. These gains came in the wake of the worst year for hedge funds on record in 2008, where many leading funds lost significant amounts of money.

One of the biggest turnaround stories in 2009 was the fortunes of Ken Griffin's flagship funds at Citadel. Last year, those funds lost around 55% as the financial crisis inflicted massive losses on Citadel investors. This year, however, these same investment vehicles gained a whopping 62%, leading to a $900 million windfall for Griffin.

John Paulson, who earned $3.7 billion in 2007 betting against subprime mortgages and $2 billion last year, had another very strong year. He came in at number four on this year's list with estimated earnings of around $2.3 billion. Mr. Paulson has significant investments in both the SPDR Gold Trust ETF (NYSE: GLD) and AngloGold Ashanti Limited (NYSE: AU).

Former mathematician Jim Simons, who runs the most successful hedge fund in the world, landed in the number three spot on this year's compensation list, with profits of around $2.5 billion. Simons runs Renaissance Technologies, which manages the Medallion Fund, the highest returning hedge fund of all time. Renaissance is staffed with an army of PhD's with expertise in an array of quantitative disciplines. Renaissance does not hire from Wall Street, preferring candidates that have done rigorous scientific research. Most of the Medallion fund's profits come from short term trading strategies in electronic markets across the globe.

SAC Capital's Steve Cohen, who has become a fixture on this list, also had another huge year. Cohen finished in 5th place with earnings of $1.4 billion. Cohen trades primarily a long/short equity strategy. His firm employs over 800 people and is based in Stamford, Connecticut. Below, is the top 10 list which was compiled by Absolute Return + Alpha.com.

Top Earning Fund Mangers

1.David Tepper, Appaloosa Management
Est. 2009 personal earnings: $4 billion

2. George Soros, Soros Fund Management
Est. 2009 personal earnings: $3.3 billion

3. James Simons, Renaissance Technologies
Est. 2009 personal earnings: $2.5 billion

4: John Paulson, Paulson & Company
Est. 2009 personal earnings: $2.3 billion

5: Steve Cohen, SAC Capital Advisors
Est. 2009 personal earnings: $1.4 billion

6. (tie): Carl Icahn, Icahn Capital
Est. 2009 personal earnings: $1.3 billion

6. (tie): Edward Lampert, ESL Investments
Est. 2009 personal earnings: $1.3 billion

8. (tie): Kenneth Griffin, Citadel Investment Group
Est. 2009 personal earnings: $900 million

8. (tie): John Arnold, Centaurus Advisors
Est. 2009 personal earnings: $900 million

10. Philip Falcone, Harbinger Capital Partners
Est. 2009 personal earnings: $825 million