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As the stock market soared in 2023, so did the fortunes of many of the world’s largest hedge funds.
The 20 best-performing hedge funds earned $67 billion in profits last year, according to data released by LCH Investments, a so-called fund of funds that ranks the top 20 companies based on lifetime returns after fees. This is three times higher than the 2022 report. .
The gains enjoyed by the stock market over the past year have been followed by strong performance by elite investors. The S&P 500, Wall Street’s most widely followed benchmark, hit an all-time high last week.
This has benefited hedge funds, especially those that bet heavily on individual stocks. While many industry players are heavily invested in the “Great Seven” tech stocks: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, some on Wall Street are betting on the same companies. They are starting to worry that there are too many investors.
In some ways, this data reflects the growing gap between industry leaders and the rest. The top 20 companies oversee just under 19 percent of the industry’s $3.5 trillion in assets under management, but they account for 46 percent of the industry’s total lifetime profits.
Topping the list of 2023 performers was TCI, an activist hedge fund run by financier Christopher Horn, which reported net income of $12.9 billion. Other top performers last year included Citadel, DE Shaw, Millennium, Elliott Management, and more.
Large companies that reported losses last year included Bridgewater Associates and Caxton Associates, founded by outspoken billionaire Ray Dalio.
Returning to the top 20 for lifetime returns in the latest rankings is Pershing, a company run by William A. Ackman, best known in recent days for calling for the resignations of the presidents of MIT, Harvard University, and the University of Pennsylvania. It was Square Capital Management. citing concerns about the handling of anti-Semitic acts on campus.
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