Others think the game is just about up.
“Our expectations are much more muted,” says John Bailey, chief executive officer at Spruce Private Investors LLC in Stamford, Connecticut, which advises clients on alternative investments. “The easy money’s been made.”
Most-Profitable
Our ranking of the most-profitable funds took 2011 performance numbers into account because most managers get paid only when the value of their funds is greater than its previous highest value. About half of the top-performing large hedge funds had negative returns in 2011. The profits for these funds were calculated by using the percentage by which their return this year exceeded their “high-water mark.”
Several funds appearing on the most-profitable ranking do not show up on our lists of top performers. That is because the size of a fund can trump returns in calculating profits.
We couldn’t obtain returns from several of the biggest hedge-fund firms by assets. For a handful of other firms, we had returns on only one or two funds. Onshore and offshore assets and returns were combined for a number of funds, while figures for other funds on our lists were for only the larger class of the fund.
The numbers were difficult to verify. Unless the information came from Bloomberg or the hedge-fund firm itself, we tried to verify it with other sources.