Brett Icahn Finally Earns His Father’s Love

And $280 million.
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Forbes’ annual list of the 25 hedge fund managers who made the most money last year is out, and once again it’s topped by a guy who doesn’t technically run a hedge fund anymore: Renaissance Technologies founder James Simons, who retired eight years ago, still made $1.5 billion last year, good enough for a first-place tie with BlueCrest Capital Management’s Michael Platt. The two guys who actually run RenTech, Peter Brown and Bob Mercer (the latter when he’s not busy harming the country), had to settle for $125 million apiece and sharing 25th place on the list.

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Simons’ triumph means that, in three of the last four years, the highest-earning hedge fund manager hasn’t been a hedge fund manager at all: The equally-retired George Soros topped the list in 2013 with an impressive $4 billion haul, and the forcibly-retired-for-the-time-being Steve Cohen brought home $1.3 billion in 2014, the year he became head of a family office. 2015's champ, Ken Griffin, may have avoided many of the problems faced by his industry, but still made less than one-third of the $1.7 billion he didn’t have to share with a certain ex-wife that year.

Now, there is an Icahn on this list. But it is not the regulation-shredding, rules-ignoring,diet-shake-swilling octogenarian you're thinking of, since he lost 20% last year. No, junior—Brett Icahn—was the only member of the family to make some dough in 2016, thanks to the $280 million payout daddy promised in 2012 if sonny made good. Which he did! Mazel tov.

At 37, Brett Icahn is the youngest trader on the list. With his trading partner, David Schechter, Icahn has been co-managing the Sargon Portfolio of his billionaire dad's investment fund for years. The fund manages Carl Icahn's money and assets belonging to publicly-traded Icahn Enterprises. The portfolio performed very well in recent years and reached $8 billion in size. Under a 2012 deal struck with Carl Icahn, Brett Icahn and Schechter both received a $280 million payment at the end of September 2016 that was equal to 7.5% of the profit the Sargon portfolio generated over an annual return hurdle of 4%.

Ray Dalio, meanwhile, is poised to retake the crown he last won in 2011, earning $1.4 billion last year—and that’s before all of the book money he’ll be rolling in later this year. After that, things drop off pretty dramatically, what with 2016 being yet another crummy year for the hedge-fund set (thanks, Obama). David Tepper had to settle for a mere three-quarters of a billion, and KG half. Daniel Loeb, Peter Singer and David Shaw are making due with $400 million apiece. Two Sigma’s John Overdeck and David Siegel round out the top 10 with $375 million paydays.

The 25 Highest-Earning Hedge Fund Managers And Traders of 2016 [Forbes]

Related

Carl Icahn Gives Son Four Years To Prove Himself

Ten years ago, Carl Icahn hired his son Brett to be an analyst at Icahn Enterprises and the kid didn't fuck anything up so he got to keep his job. Two year ago, Carl gave Brett and another employee, David Schechter, $300 million to invest under the "Sargon portfolio," and the guys returned 96 percent (before fees) through June. Last month, Carl tossed the duo an additional $3 billion and a contract that expires in 2016, at which time Papa Icahn will either officially Brett a worthy successor or offer to serve as a reference for his next gig. Under a 46-page legal agreement filed with federal regulators last month, Brett Icahn and Schechter will get to invest their boss’s capital in companies with stock market values between $750 million and $10 billion. The deal may free the elder Icahn, who still has final say over many aspects of the portfolio, to focus on larger targets for shareholder activism. Brett, who turns 33 this month, along with Schechter has been running $300 million for his father, who owns more than 90 percent of Icahn Enterprises LP, a holding company with $24 billion in assets including activist investing partnerships as well as the Tropicana casinos, an oil refiner and an auto-parts maker. The arrangement expires after Carl turns 80 in 2016, giving Brett the chance to both prove his mettle as a successor and develop a track record to start his own hedge fund. After hiring Brett as an investment analyst a decade ago, Icahn allocated the $300 million to his son and Schechter in April 2010 to invest in loans and securities of companies with less than $2 billion in equity value. Their investments, internally dubbed the Sargon portfolio, generated a gross cumulative gain of 96 percent by the end of June, according to a July 27 filing with the U.S. Securities and Exchange Commission...“These two guys doubled our money over the last two years,” the elder Icahn said in an interview. “You can’t complain about that.” Carl Icahn Hands Son Brett $3 Billion To Prove His Mettle [Bloomberg]