Nick Paumgarten attended an election-night party with various hedgies:
One hedge-fund trader, a Democrat, said that he’d recently reread (several times) John Kenneth Galbraith’s classic history “The Great Crash, 1929.” He quoted two passages from memory: “The singular feature of the Great Crash of 1929 was that the worst continued to worsen”; and “The autumn of 1929 was, perhaps, the first occasion when men succeeded on a large scale in swindling themselves.” He reckoned that the autumn of 2008 was the second. His boss, looking on, seemed irritated by this display, until it became clear that he was preoccupied by the news that another man at the party had made an investor five billion dollars that year–five yards, in the vulgate. The presence of superior performance stung him.
So, there’s a hedge fund manager who made an investor $5 billion this year. The question then becomes: which fund manager, and which investor?
I suspect that the answer here is John Paulson, who started the year with $28 billion and is up to $35 billion at this point. Which means his investors, plural, have made $5 billion, assuming zero inflows — but no single investor has made that much.
But it does raise the question: what’s the largest amount of money that any one investor (not principal) has ever made from a single hedge-fund investment? My best guess is one of Julian Robertson’s investments in his tiger cubs, but any concrete datapoints would be welcome.