Meet the New Hedge Fund King

Once the number one hedge fund manager in the world, George Soros must now give up that title...

Ray Dalio has moved into the top position as a result of the success of his Bridgewater Pure Alpha fund, which made $13.8 billion for investors in 2011.

His analysis of the recent financial crisis gave him fame when he built his company around economic factors that he accurately predicted. Bridgewater’s focus became pension funds and institutional investors, going off of his expectation that the world economy was threatened by similar conditions to the Great Depression.

And now it has $72 billion under management.

Conversely, Paulson & Co., run by John Paulson out of New York, lost investors $9.6 billion in the same period, the largest loss ever, yet it still managed to remain at number three in investor returns according to a ranking by LCH investments.

A lot of it has to do with betting. Paulson’s company inaccurately bet on an economic recovery, which led to a big portion of the loss. Rick Sopher of LCH summed it up:

“Macro investing is notoriously difficult, but the best managers are able to find opportunities, especially in troubled markets.”

And that makes Dalio a pretty good manager.

Overall, hedge funds lost $123 billion in 2011, but some companies came out on top.

LCH listed the top five companies in net gains as Bridgewater Pure Alpha with $35.8 billion, Quantum Endowment Fund with $31.2 billion, Paulson & Co with $22.6 billion, Baupost with $16 billion, and Brevan Howard Fund with $15.7 billion.