Not even the encouraging words of a private equity titan could brighten the mood of some of the world’s top hedge fund managers.

“Don’t be embarrassed about making money,” David Rubenstein, the billionaire co-founder of Carlyle Group, told attendees at the SkyBridge Alternatives Conference in Las Vegas on Wednesday. “It’s been a great industry for the U.S. and created a lot of jobs and made companies valuable. You shouldn’t be upset about that.”

Rubenstein had kicked off the annual gathering of hedge fund managers, encouraging them to do a better job at defending what they do. Yet just hours later, the masters of the universe -- criticized for making too much money for themselves by some, and for making too little for investors by others -- were again on the defensive after a large investor in the funds spotlighted their lackluster performance.

In the past two weeks, the $2.9 trillion hedge fund industry has been criticized by billionaire money managers Steven A. Cohen, Warren Buffett and Daniel Loeb over talent, fees and performance. Cohen said he was “blown away by the lack of talent,” Buffett described the industry’s fee structure as “unbelievable” while Loeb said funds were in the early stages of a “washout” and their performance this year was “catastrophic.”

For Leon Cooperman, the founder of Omega Advisors, it was time to reminisce. The period between 2000 and 2007 was a moment in the sun for hedge funds, a “golden age” as he called it. These days, managers who want to compete will have to cut fees or look to complex computer models for help, he said, a trend he’s not inclined to embrace.

"At age 73 I’m not going to learn a new game," he said.

‘I’m Disappointed’

Omega, based in New York, returned an annual average of 11 percent from inception in 1991 through 2014, according to an investor letter. Cooperman’s fund has struggled lately; it lost 10.4 percent in 2015 and was down 5.6 percent in this year’s first quarter. He said that, after seeing clients pull capital amid lackluster returns, he’s running his fund as though it were a family office, since 40 percent of the money is now partner capital.

His comments came after Roslyn Zhang, managing director of China Investment Corp., the nation’s largest sovereign wealth fund and a big investor in hedge funds, criticized the industry for lackluster performance in recent years. Hedge fund managers are among the highest paid in the finance industry, traditionally charging 2 percent of assets as a management fee and 20 percent of profits.

“Over the last couple years I’m kind of disappointed by the performance,” Zhang said Wednesday at the same conference, adding many funds had crowded into the same trades.

She cited the popular hedge fund wager against China’s yuan and questioned why investors are paying fees of 2 percent of assets and 20 percent of profits. “I’m kind of reflecting to myself that maybe we’re not making the right decision.”

Rubicon Fund Management’s Paul Brewer said part of the problem is that some fund had simply gotten too big to find unique ways of making money.

Smaller Managers

"Everyone’s chasing the same market opportunity" when they have billions of dollars under management, he said at the conference. "I think investors need to rethink that model," he added, suggesting that the industry could end up with more, smaller firms.

Kyle Bass, the founder of Dallas-based Hayman Capital, said uses dedicated funds for certain strategies to weather short-term losses that can cause investors to flee. For now, he said, managers are struggling to hang on as they promise better performance in the future.

"It’s easy to maintain conviction," Bass said. "It’s just how do you maintain investors?"

Graham Capital Management’s Kenneth Tropin said successful managers have already had to become more transparent, communicate more with investors and be willing to negotiate with clients on fees and structures. But there’s only so far managers can bend.

Family Office

"It’s not profitable to run a hedge fund if you charge less than it takes to run a business," said Tropin, whose firm oversaw $12.1 billion as of May 1 in wagers around macroeconomic events, both through humans and machines. “You reach a point where you may no longer be able to cut fees to where the clients want it to go."

Falling assets at Cooperman’s Omega are what’s changed his model, the money manager said. Omega oversaw $6.7 billion in regulatory assets, a measure that includes leverage, as of the end of last year, according to a government filing. The firm had managed $9.4 billion as recently as March 2015.