In this article, we will take a look at 10 youngest hedge fund billionaires and their top stock picks.
Hedge funds are funds that take money from wealthy individuals and invest that money using a variety of strategies in an effort to make a return. Given the risks and the fees involved, only high net worth individuals and institutions are allowed to invest.
The first hedge fund began when Alfred W. Jones began his first fund in 1949 when he bought stocks, hedged positions, and charged a fee that required investors pay him 20% of the profits of the fund. Given Jones’ example, many later hedge funds charged the same structure, and the 2% management fee and 20% incentive fee became standard.
With the growth of the United States economy, the total value of stocks in the United States has increased over time.
In terms of the S&P 500, the index has had an average annualized return since inception in 1928 to the end of 2021 of 11.82%. The S&P 500 index represents 500 of the largest U.S. companies including many blue chips. More recently, the S&P 500 has averaged annual returns of 13.34% in the last 10 years as of 11/30/22.
Although the total hedge fund performance isn’t 100% correlated with the S&P 500’s performance because hedge funds use a variety of different strategies, some hedge funds have nevertheless done really well over time. As a result of that growth, some hedge fund managers, including some who are relatively young, rank among the world’s richest individuals.
Many of the World’s Youngest Hedge Fund Billionaires Are American
Many of the youngest hedge fund billionaires are based in the United States given the United States economy is the world’s largest with a GDP of $23 trillion as of 2021.
The American economy has expanded substantially over time given productivity increases, population growth, and inflation. While American GDP was around $1 trillion in 1970, it rose to nearly $6 trillion in 1990 and over $10 trillion in 2000. Given the many bright people in America, the country will likely continue to lead the world in innovation in the future and its economy will likely continue to grow.
Many of the youngest hedge fund billionaires are also based in the United States because New York City is the financial capital of the world and home to Wall Street. Because New York City is the financial capital, many leading financial institutions are based there and many hedge funds also want to have headquarters there as well.
New York City describes itself, “New York City is the world’s most sophisticated and diverse financial center. Home to 45 Fortune 500 companies, NYC boasts the deepest capital pools, the finest international talent, and an administration that is committed to strengthen the city’s financial base.” The city also notes it has a large talent base of over 330,000 financial services workers as well as a favorable corporate culture.
2022
In 2022, the broader market has also weakened given that the Federal Reserve has increased interest rates substantially to fight inflation.
More recently, some hedge funds have lagged the market in their performance and institutions have asked for a change from the traditional 2% and 20% fee structure.
Although inflation has shown signs of potentially peaking in October, many still think the U.S. central bank will continue to raise rates further. If the Federal Reserve raises rates too much, there could be a recession next year. If the economic slowdown is worse than expected, there could be more downside and some hedge funds might not do as well.
Given the uncertainty, it could be a good idea for long term investors to own a well diversified portfolio of stocks across many different sectors.
John Overdeck of Two Sigma Advisors
Methodology
For our list of 10 Youngest Hedge Fund Billionaires and Their Top Stock Picks, we selected the 10 youngest hedge fund billionaires from Forbes’ The Richest People In The World list for 2022.
We ranked the hedge fund managers based on age and included their net worth according to Forbes.
For those of you interested, also check out 15 Most Famous Investment Gurus of All Time.
10 Youngest Hedge Fund Billionaires and Their Top Stock Picks
10. Philippe Laffont
Net Worth: $6.5 billion
Age: 54
Philippe Laffont is the founder of Coatue Management, a tech focused fund that has a portfolio value of $8.61 billion at the end of Q3. At the end of the third quarter, Coatue Management’s top position was Tesla, Inc. (NASDAQ:TSLA) with a stake value of $840.6 million. Laffont is the 10th youngest hedge fund billionaire on our list with a net worth of $6.5 billion at the age of 54.
Alongside Corebridge Financial, Inc. (NYSE:CRBG), Avis Budget Group, Inc. (NASDAQ:CAR), and JD.com, Inc. (NASDAQ:JD), Tesla, Inc. (NASDAQ:TSLA) is a top stock pick among the youngest hedge fund billionaires at the end of Q3 2022.
9. Michael Platt
Net Worth: $15.2 billion
Age: 54
Michael Platt ranks #9 on our list of 10 Youngest Hedge Fund Billionaires and Their Top Stock Picks with a net worth of $15.2 billion at the age of 54. Platt founded the hedge fund BlueCrest Capital Management LP in 2000 before eventually returning investors’ money and managing money for himself and his partners. As of September, BlueCrest Capital Management LP’s largest position was in SPDR Gold Shares (NYSE:GLD) with stake value of almost $168 million. According to Bloomberg in October, the fund is on track for its best year since going private given bets on rising inflation and interest rates.
8. Ken Griffin
Net Worth: $27.2 billion
Age: 53
Ken Griffin is the founder of hedge fund Citadel Investment Group and also one of the richest people in the world with a net worth $27.2 billion at the age of 53. According to the company, Citadel Investment Group was awarded multistrategy hedge fund manager of the year award by institutional investor in 2022, a distinction the fund won five times in the last 10 years. As of November 1, 2022, the company had investment capital of $59 billion. Citadel Investment Group’s largest equity position was Amazon.com, Inc. (NASDAQ:AMZN) with almost 9.26 million shares at the end of September.
Diamond Hill Capital Management commented on Amazon.com, Inc. (NASDAQ:AMZN) in a Q2 2022 investor letter,
Amazon.com, Inc. (NASDAQ:AMZN)’s shares underperformed as valuations of fast-growing companies continued to compress in Q2. Amazon’s growth investments over the past two years have pressured earnings as consumer demand has been weaker than anticipated. However, we believe the company will be able to grow into its infrastructure investments over time. These investments have obscured the magnitude of sustainable free cash flow as well as the attractive valuation of the business relative to peers.
7. Larry Robbins
Net Worth: $1.9 billion
Age: 52
Larry Robbins is the founder of Glenview Capital which has a portfolio value of $4 billion at the end of Q3. On September 30, Glenview Capital’s largest position at the end of September was Cigna Corporation (NYSE:CI) with a holding of 1.94 million shares. According to Institutional Investor on December 6, Glenview Capital’s flagship fund, Glenview Capital Partners, gained 4.6% in October to cut its year to date losses to 5.5%. That’s better than the S&P 500’s return which is down over 17% as of December 8. Larry Robbins is one of the youngest billionaire hedge fund managers in the world with a net worth of $1.9 billion at the age of 52.
6. John Overdeck
Net Worth: $6.5 billion
Age: 52
John Overdeck is the founder of one of the world’s leading quantitative firms, Two Sigma Advisors, which had over 2,500 different stocks in its 13F equity portfolio at the end of the third quarter. As a quantitative firm, Two Sigma Advisors routinely buys and sells thousands of different stocks in a quarter based on complex algorithms and massive computing.
Of Two Sigma Advisors’ positions, the fund’s top position was in Microsoft Corporation (NASDAQ:MSFT) with a position value of $760.5 million at the end of September.
Given Two Sigma Advisors success, John Overdeck is worth $6.5 billion at the age of 52.
Diamond Hill commented on Microsoft Corporation (NASDAQ:MSFT) in a Q3 2022 investor letter,
Also among our bottom contributors were media and technology giant Alphabet, software and IT services provider Microsoft Corporation (NASDAQ:MSFT) and insurance company American International Group (AIG). Microsoft shares declined in Q3, along with other tech companies, as rising interest rates impacted the near-term outlook. We expect the business to continue to generate strong revenue growth and benefit from operating leverage. Microsoft’s cloud computing services business, Azure, is generating robust growth, confirming its competitive positioning.
In addition to Microsoft Corporation (NASDAQ:MSFT), the youngest hedge fund billionaires also owned Corebridge Financial, Inc. (NYSE:CRBG), Avis Budget Group, Inc. (NASDAQ:CAR), and JD.com, Inc. (NASDAQ:JD) as top picks at the end of Q3 2022.
5. Christopher Rokos
Net Worth: $1.5 billion
Age: 51
Christopher Rokos is the hedge fund manager of Rokos Capital Management. According to the company, Rokos Capital Management is a UK alternative investment fund manager that focuses on macro asset classes in developed and emerging markets. The fund describes, “Our CIO, Chris Rokos, heads a small group of experienced Investment Officers with complementary, intersecting skillsets seeking to take controlled risk on an opportunistic basis. Our investment process is supported by economic research and quantitative analysis to capture and organise data, inform and improve decision making, and maximise efficiency of trade expression.” At the end of Q3, Rokos Capital Management’s largest position was 662,503 shares of Microsoft Corporation (NASDAQ:MSFT). Given the fund’s growth over the years, Christopher Rokos has a net worth of $1.5 billion at the age of 51.
4. Jeffrey Talpins
Net Worth: $2.2 billion
Age: 47
Jeffrey Talpins is the founder of Element Capital Management and one of the youngest billionaire hedge fund managers in the world with a net worth of $2.2 billion at the age of 47. Element Capital Management is a macro fund with assets under management of nearly $50 billion. Because it invests in a lot of other asset classes besides equities, Element Capital Management only had a portfolio value of $208,796,000 at the end of September. Element Capital Management’s biggest 13F equity position was a 1 million share position in Corebridge Financial, Inc. (NYSE:CRBG) at the end of Q3.
3. Karthik Sarma
Net Worth: $3.1 billion
Age: 47
Karthik Sarma is the founder of SRS Investment Management which has assets under management of $10 billion. Previously, Karthik Sarma was a former managing director at tech fund Tiger Global Management where he worked for 5 years. SRS Investment Management’s biggest position was Avis Budget Group, Inc. (NASDAQ:CAR) with a stake value of almost $2.74 billion at the end of Q3. Karthik Sarma has a net worth of $3.1 billion at the age of 47.
2. Chase Coleman
Net Worth: $10.3 billion
Age: 46
Chase Coleman is the founder of Tiger Global Management whose biggest position was JD.com, Inc. (NASDAQ:JD) worth $1.5 billion at the end of Q3. Given Tiger Global Management’s growth before 2022, Chase Coleman is one of the richest hedge fund managers in the world with a net worth of $10.3 billion. Given his age of 46, Chase Coleman is also the second youngest.
1. Daniel Sundheim
Net Worth: $3.2 billion
Age: 45
Daniel Sundheim is the founder of D1 Capital Partners and the youngest billionaire hedge fund manager in the world with a net worth of $3.2 billion at the age of 45.
The fund describes itself, “D1 Capital Partners is a global investment firm that operates across public and private markets. The firm combines the talent and operational excellence of a large, premier asset management firm with the flexible mandate and long-term time horizon of a family office. Founded in 2018 by Daniel Sundheim, D1 focuses on investing in the global internet, technology, telecom, media, consumer, healthcare, financial, industrial, and real estate sectors.”
D1 Capital Partners’ largest position was in Microsoft Corporation (NASDAQ:MSFT) with a stake value of $633 million at the end of Q3.
You can also take a look at 15 Biggest Banks In The World and Ken Griffin Stock Portfolio: Top 10 Stock Picks.
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Disclosure: None. 10 Youngest Hedge Fund Billionaires and Their Top Stock Picks is originally published on Insider Monkey.
