A Look at the Best Performing Hedge Fund Managers In 2021

Hedge Funds fall under the category of alternative investments. They are actively managed pools of investment funds that use various investment strategies to beat the average investment returns. The minimum investment required for hedge funds is high, which means that usually, hedge funds’ clients are high net worth individuals (HNWI).

For an individual retail investor, a closer look at hedge funds’ data reveals which companies or sectors they are upbeat about – an interesting insight. In the midst of the pandemic and the following market upheaval, let us look at how hedge funds have performed.

TipRanks uses data from Form 13-F to determine the hedge fund signals – that is, hedge fund performance. Form 13-F is submitted to the Securities Exchange Commission (SEC) by hedge funds that manage more than $100 million in assets.

So, without further ado, using TipRanks data, here are some of the top-ranked hedge fund managers from some of the Best Hedge Funds this year.

John Kim (Night Owl Capital Management)

The first one on this list is John Kim, hedge fund manager for Night Owl Capital Management and ranked #1 out of 198 hedge funds on TipRanks. Kim’s portfolio has gained a whopping 569.2% since 2013. In contrast, the S&P 500 stock index has gained 290.9%.

The hedge fund manager’s portfolio has given annualized average returns of 58.4% in the past three years, and Kim currently manages assets worth $569.8 million. It is important here to also look at the Sharpe ratio, which stands at 8.96.

Sharpe ratio is a measure of risk-adjusted return that indicates the additional return obtained by the hedge fund investor for every level of risk taken. Usually, a Sharpe ratio of more than 1 is considered good, while a ratio that is below 1 should be judged based on the investment strategy used.

So, which sector is Kim most bullish about? Judging by the hedge fund’s portfolio, it seems to be the technology sector, with an approximately 66% investment in this sector, followed by the financial sector.

A look at the hedge fund’s manager’s portfolio activity indicates that Microsoft (MSFT) makes up 9.3% of the portfolio, followed by Amazon (AMZN) and Aon (AON) at 8.8% and 8.5%, respectively.

Nelson Peltz (Trian Fund Management)

Nelson Peltz, CEO and Co-Founder of Trian Fund Management, is ranked #2 on the TipRanks Best Hedge Fund Managers list. Trian Fund Management was founded in 2005 and is a “highly engaged shareowner that combines concentrated public equity ownership with operational expertise,” according to the company’s website.

Besides for Peltz, Trian’s founding partners include Ed Garden and Peter May. Peltz currently has $8 billion worth of assets under management, that is, more assets than 99% of other hedge fund managers.

Peltz’s portfolio has gained 444.1% since June 2013 versus the S&P 500 index gaining 290.9% over the same period. The hedge fund manager’s portfolio has given an annualized return of 45.6% over a period of three years.

The manager’s portfolio has a Sharpe ratio of 7.98. Peltz’s portfolio is skewed towards the Consumer Goods sector, with a 43.2% investment in this sector.

Comcast (CMCSA) makes up 13.8% of Peltz’s portfolio, followed by Sysco (SYY) and Invesco (IVZ) at 13.1% and 10.9%, respectively.

Brad Gerstner (Altimeter Capital Management)

Brad Gerstner is a hedge fund manager for Altimeter Capital Management and ranked #3 on this list. Altimeter is a technology-focused investment firm based out of Menlo Park, California, and Boston, Massachusetts.

Gerstner manages assets worth $12.2 billion and his portfolio has gained 668.7% since June 2013. The portfolio has given average returns of 68.6% on an annualized basis over a three-year period.

Altimeter’s portfolio, managed by Gerstner, has a Sharpe ratio of 7.92. The portfolio is sharply skewed towards the technology sector, with an investment of 91.6% in this sector.

Snowflake (SNOW) makes up more than half of Gerstner’s portfolio at 52%, followed by Meta Platforms (FB) and Uber Technologies (UBER) at 10.4% and 8.9%, respectively.

Chuck Akre (Akre Capital Management)

Chuck Akre is the managing member, CEO, and CIO of Akre Capital Management and ranked #4 on this list. Akre Capital Management was founded in 1989 and is an asset management firm. As of November 30, Akre managed a combined $19.3 billion in private funds, the Akre Focus mutual fund, and separately managed account assets.

The portfolio managed by Akre has gained 451.5% since June 2013, beating the S&P 500 index returns of 290.9% over the same period.

Chuck manages $16.2 billion worth of assets and his portfolio has given average returns of 46.4% over a period of three years, on an annualized basis. Akre’s portfolio has a Sharpe ratio of 8.06 with 57.9% of the portfolio invested in the financial sector and 25.1% invested in the technology sector.

Mastercard (MA), Moody’s (MCO), and American Tower (AMT) made up 12.5%, 12.3%, and 11.4% each of Akre’s portfolio.

Andy Brown (Cedar Rock Capital Ltd.)

Andy Brown is the CEO and portfolio manager of Cedar Rock Capital, an independent investment firm founded in 2002 and ranked #5 on this list. Cedar Rock is based out of London, United Kingdom. Brown manages $4.2 billion worth of assets, that is, more assets than 92% of other hedge fund managers.

His portfolio has gained 346% since June 2013 with a Sharpe ratio of 7.46. The portfolio returns have exceeded the average hedge fund portfolio return of 98.8%. Brown’s portfolio has given average returns of 35.5% on an annualized basis over a period of 3 years.

The portfolio has a majority of its holdings, that is, 58.6%, in the Consumer Goods sector, with 24.7% of the portfolio invested in Procter & Gamble (PG) and 18.2% invested in Phillip Morris (PM).

Disclosure: At the time of publication, Shrilekha Pethe did not have a position in any of the securities mentioned in this article.