Topping this year’s list of top paid hedge fund managers is John Arnold, according to the issue of Trader Monthly due on newsstands April 17. The thirty-three year old Arnold is head of energy hedge fund Centaurus Energy, where he earned between $1.5 and $2 billion last year, according to the magazine. This puts him on top of better known hedge funds kings Eddie Lampert, T. Boone Pickens, Stevie Cohen.
So how did Arnold do it? Arnold was one of the traders who was rumored last year to have taken the opposite sides of the trading position of Brian Hunter, the Calgary based energy trader whose bets on nature gas prices helped topple Amaranth Advisors. This rumor, however, is disputed by the New York Times, as DealBook reminds us this morning.
As the Amaranth meltdown unfolded in September, there were rumors that Mr. Arnold’s fund was playing a “game of chicken” with Amaranth and its head energy trader, Brian Hunter, taking opposing views on the direction of natural-gas prices. But The New York Times, citing one person who had seen Centaurus’s trading records, reported at the time that Mr. Arnold had not taken a “directly opposite position” to Amaranth and had not booked spectacular gains during those weeks.
Arnold cut his teeth trading natural gas at Enron. A January 2006 article in the New York Times described his fund's origins and its offices.
Centaurus eschews most publicity and operates out of the eighth floor of a nondescript building near a highway, its glass doors tinted with light blue to prevent visitors from seeing what happens inside.
When Mr. Arnold, 31, created Centaurus in 2002 with $8 million of his own money, the energy trading industry was on its knees, incapacitated by the fraud and irrational exuberance at Enron. Since then, Centaurus has amassed $1.5 billion in assets under management and has hired big-name traders like Greg Whalley, a former Enron president.
Hunter may have another chance to take on Arnold, as he recently began putting together a new energy trading fund, Solengo Capital.
TM 100 Profiles 1-10: John Arnold [Trader Monthly]
A Billion-Dollar Year for Top Hedge Fund Managers [DealBook]
No Hedge Against Salary [New York Post]
Energy Trading, Post-Enron [New York Times]