2014 was not a good year for the hedge fund industry. 889 hedge funds shuttered their doors throughout the year, according to data from EurekaHedge, and some big-name firms like Brevan Howard took the decision to close some underperforming funds as average returns hobbled in at 2% across the industry.
Despite this, compensation has increased for hedge fund professionals, with average pay of $370k, according to analysis from HedgeFundCompensationReport.com, echoing other predictions of spiralling pay on the buy-side. But this was primarily analysis of the US market – what about the big swingers in London’s Mayfair district?
Over the course of the Christmas period, six London hedge funds quietly released their annual accounts on the Companies House website and – despite the overall gloom – they show that there are still some huge paydays to be had.
Marathon’s profits slumped from £172m in 2013 to £126.5m for the 12 months to March 2014. This was all made available for discretionary division among its four members, meaning an average payout of £31.6m. The member with the highest allocation received £36.6m, compared to a whopping £103.9m in 2013.
While profits were down across most locations, in the UK turnover nearly halved to £9.9m from £18.3m in 2013, compared to £140m in the US (down from £182.4m) and £36.9m elsewhere (from £38.1m).
Staff costs outside of the LLP have actually increased a little, despite a minor reduction in headcount. It spent £42.8m on 76 employees in 2014 (or an average of £563.1k) compared to £40.5m on 77 staff.
Oxford split just £1.9m between its seven members last year, or an average payout of £271.4k as profits slumped at the quantitative hedge fund. This is compared to £90.5m in 2013, which equated to a mean payout of £12.9m.
The highest paid partner in 2013 received £44.8m, but it shelled out a comparatively paltry £670k for this individual in 2014.
Pelham’s LLP made an operating profit of £131.2m in 2014, compared to £44.1m in the previous year. It made all of this available for ‘discretionary division’ among its members, meaning an average payment of £10.9m among its 12 partners.
However, the member with the largest entitlement received a hefty £101.2m, compared £26.4m in 2013.
Brevan’s 46 members shared ‘just’ £34.7m last year, compared to £38.3m in 2013, after profits dipped from £60.4m to £55m. However, they were also given £41m in ‘relation to operating activities’ and £14m in profit share, amounting to an average payment of £1.8m.
This may seem large, but it compares with a payout of £100m in 2013 and £344m in 2012, and follows a year when a number of key staff departed and performance dropped across a some of its key funds including its flagship investment fund, which recorded its first annual loss of 0.8% in 2014.
However, despite the increase in staff churn throughout the last 12 months, for the reporting period to 31 March 2014, Brevan had actually been bolstering its headcount. It had an average of 178 employees, up from 171 in 2013, shelling out £32.1m – or £180.3k a head – during the year. Going back two years, this doesn't look great - average payouts in 2012 were £354.9k.
Odey’s profits surged to £174.2m in 2014, up from £55m in the previous 12 months and, as always, this was all made available for division among senior employees. It now has 20 members – up from 18 in 2013 – meaning an average payment of £8.7m. However, the member with the largest entitlement – presumably founder Crispin Odey – was given £47.8m, compared to £14.2m in the prior 12 months.
Odey now has 57 employees – an increase of nine of 2013 – 28 of whom are employed in investment management functions. It paid them an average of £298k for the year, compared to £252k in 2013.
Cheyne’s operating profit increased from £28.1m in 2013 to £54m for the 12 months to March 2014. It paid accordingly - £25.2m was allocated for division among its 56 members, compared to £6.6m in 2013, meaning an average payment of £450k.
However, the highest paid member received £6.1m, which is actually a decrease from £6.8m in the previous year. Elsewhere, Cheyne has nine administrative staff, paying them a total of £971k during 2014.