Soros Hedge-Fund Firm Grows While Many Rivals Shrink-Survey

By Alistair Barr

George Soros' hedge-fund firm grew strongly through the worst financial crisis since the Great Depression, while big rivals mostly shrank, according to results of a survey released Tuesday by industry publication AR.

Soros Fund Management had $24 billion in assets at the start of July, up more than 14% from the end of 2008 and more than 41% from a year earlier. That made the firm the fifth-largest in the hedge-fund industry, up from sixth at the end of 2008, AR said.

Soros was one of the few investment managers to foresee the global financial crisis that erupted last year. As markets collapsed, he stepped back into trading, helping the firm's flagship Quantum Endowment fund gain almost 10% in 2008. This year, the fund was up almost 19% through the end of July, AR reported.

Another manager who saw trouble ahead was John Paulson, head of Paulson & Co. After generating huge gains in 2007 from bets against mortgage-related securities, Paulson continued his winning streak in 2008, partly by betting against financial institutions.

This year, Paulson bet big on gold and has taken large stakes in Bank of America Corp. (BAC) and Citigroup Inc. (C). His funds were up as much as 16.38% through the end of July, AR said.

Despite those gains, Paulson's assets under management still dropped more than 6% to $27.2 billion this year as investors redeemed some of their money to rebalance portfolios to avoid being too concentrated in certain funds and strategies, AR said.

Paulson was the third-largest hedge-fund firm by assets, maintaining its position from the end of 2008, AR noted.

Bridgewater Associates, run by Ray Dalio, remained the largest hedge-fund firm in the world, overseeing $37 billion in assets at the start of July. That was down more than 4% from the end of 2008, AR said.

The asset-management division of J.P. Morgan Chase & Co. (JPM) remained the second-largest hedge-fund business, with $36 billion in assets, up 9.4% from the end of 2008, AR said.

D.E. Shaw Group remained in fourth place with $26.7 billion in assets. That was down 6.6% from the end of 2008, AR said.

The asset-management division of Goldman Sachs Group Inc. (GS) ranked sixth, up one place from the end of 2008. Assets under management inched up to $20.8 billion, AR said.

Och-Ziff Capital Management Group LLC (OZM) was seventh in AR's rankings. The firm, run by Dan Och, lost 6.33% of assets in the first half of 2009, bringing its total to $20.7 billion, AR said.

Baupost Group, run by Seth Klarman, became the eighth-largest hedge-fund firm, with assets of $19 billion, up 13% in the first half of 2009, AR said.

Farallon Capital Management, headed by Thomas Steyer, saw assets fall 10% to $18 billion in the first half of this year. That left the San Francisco-based firm ninth in AR's rankings.

Angelo, Gordon & Co.; Avenue Capital Group and Renaissance Technologies tied for 10th in AR's rankings, each with $17 billion in assets.

-Alistair Barr; 415-439-6400; [e-mail]