31-year-old hedge fund star earns $119 million

Does he deserve that phenomenal paycheck? One of his trades in 2012 resulted in a whopping $2 billion in gains.

By MSN Money Partner Apr 10, 2014 3:47PM
Image: Money © CorbisBy Nathan Vardi, Forbes

James Levin first got to know billionaire hedge fund manager Daniel Och when he taught Och’s son to water ski at camp a number of years ago. 


At 31, Levin these days is a prized employee at Och’s Och-Ziff Capital Management (OZM) hedge fund firm and last year Levin was paid phenomenally well even by the standards of the rich hedge fund industry.


According to a recent Securities & Exchange Commission filing, Och-Ziff Capital Management paid Levin $119 million in 2013. Nearly all of Levin’s compensation last year consists of stock awards and the value relates to the grant-date fair value of unvested Och-Ziff Group A units. A spokesman for Och-Ziff Capital Management declined to comment.


Levin was promoted at the age of 30 in 2013, becoming an executive officer at Och-Ziff Capital Management, where Levin is head of global credit investing. Levin made a hugely successful trade involving more than $7.5 billion on structured credit debt investments in 2012 that resulted in gains of some $2 billion, according to a 2013 report in TheWall Street Journal. It was described as one of the best bets on Wall Street in 2012.


The hedge fund and alternative investments industry pays its stars very well, with the top hedge fund managers earning more than $1 billion in good years


But the top-earning hedge fund managers are generally billionaire founders of successful hedge fund firms like David TepperKen Griffin or Och himself, who have spent years compounding their own hedge fund derived fortunes and own big stakes in hedge fund firms that charge investors rich fees. 


Still, the battle for talent these days in the hedge fund world means hedge fund firms need to pay top dollar in the form of compensation alone to retain and attract their top employees.


With $42.7 billion under management, Och-Ziff Capital Management is not only one of the largest hedge fund firms in the world, it is one of the only publicly-traded hedge fund firms. That means that the compensation of stars like Levin is publicly-disclosed and that a firm like Och-Ziff can reward him with publicly-traded stock. 


Och-Ziff’s main hedge fund, which has trailed the performance of the U.S. stock market in recent years, is up 0.31% in 2014 through March, an SEC filing show. But shares of Och-Ziff have increased by 30% in the last year as the firm attracted billions of dollars of new assets. 


Levin’s work has contributed to the bump in assets at Och-Ziff, which now manages some $4.4 billion in its dedicated credit funds. Some have questioned the ability of publicly-traded alternative asset managers to deliver good results to two different constituencies -- investors in their stock and investors in their funds.


A computer science graduate from Harvard, Levin got a job in finance at Sagamore Hill Capital Management , according to Levin’s bio on Och-Ziff’s web site. He also worked as a distressed debt and statistical-arbitrage analyst at Dune Capital before joining Och-Ziff Capital Management in 2006. 


Last year, Och-Ziff hired Semler Brossy Consulting Group as a third-party advisor to help advise the hedge fund firm in connection with Levin’s promotion and new compensation package. Levin reached a deal with Och-Ziff in late January of 2013. 


Och Ziff’s compensation committee relied on the advice it got from Semler Brossy to determine that Levin’s stock awards “would create an appropriate ongoing alignment between Mr. Levin and our shareholders and fund investors by encouraging him to make managerial decisions that support the preservation and growth of our long-term market value and to provide continued investment thought leadership for investors,” an SEC filing says.


Levin did not earn a salary last year and was paid $64,617 in  cash compensation, an SEC filing shows. Och-Ziff granted 12 million operating Group D retention units to Levin in 2013 that converted into Group A units in May 2013 and vest in 10 equal annual installments starting in January 2014. He also got another 7 million retention units that vest over nine years. In total, Levin held unvested Och-Ziff shares valued at $232 million at the end of 2013, an SEC filing shows.


More from Forbes


14Comments
Apr 10, 2014 4:51PM
avatar

Good compensation is great.  However, this kind of awarding  pattern  may mislead people to take unreasonable risk.   My focus is really on "One Big Bet with others money".

 

If we allow people to make one big bet and they can be compensated greatly. Is it an encouragement for them to gamble or take "great risk" for it ?     Unfortunately,  if the bet  goes south, one may lose his job but other lost  billion of $.    Most people would incline to  take a huge bet in their life and think they did the right thing. However, it was  the huge  reward that worth a life time work  (or many life time for others ) that would cloud their judgment.    

 

I believe such huge reward should be granted  only  based on many successes along with  some  acceptable  failure.  Take risk is good in investment but the risk needs to be capped.    we are just human and the temptation is just too great.

Apr 10, 2014 8:04PM
avatar
Use index funds.  Keep Wall Street poor.
Apr 11, 2014 9:54AM
avatar
good job if you can get it, even better if you can make it..
Apr 11, 2014 7:01AM
avatar
$119 million to a paper and button pusher-- while 119 million small businesses die a little more each day because there are hedge funds. Rethinking how stupid this is-- is a national priority.  
Apr 11, 2014 8:22AM
avatar

Good job and congratulations on making good decisions.

 

Now let the haters rain in.

Apr 11, 2014 12:08AM
avatar
But hey he did it from home on his computer right. LOL
Apr 11, 2014 9:36AM
avatar
Nobody is worth this much of money.  I would never invest in this fund as they spend way too much on their alleged "super stars".  I hope this kid takes some of his money and uses it to better society.
Apr 11, 2014 6:48AM
avatar
This guy did nothing that added to society. An example of the great failure of capitalism.
Apr 10, 2014 10:15PM
avatar
Even if his gamble resulted in the reported $2 billion in gains in 2012 (and that's before corporate taxes) and assuming that largely determined his 2013 compensation package of $119 million, that represents about at 10% reward payout on gross earnings.  Seems unreasonably large by any of my standards . . . but then again I don't deal in the hedge fund world and never will.
Apr 11, 2014 12:46AM
avatar

in a free-market system, the question is this: do all investors have access to the same information and the same trade as mr. levin?  if so, pay the man ... if not, recognize that the system is broken, not policed well enough and sooner or later will benefit only the few and harm the nation ...

 

wake up America ...

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

118
118 rated 1
270
270 rated 2
472
472 rated 3
714
714 rated 4
624
624 rated 5
608
608 rated 6
623
623 rated 7
445
445 rated 8
319
319 rated 9
125
125 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ARCPAMERICAN REALTY CAPITAL PROPERTIES Inc10
ATVIACTIVISION BLIZZARD Inc10
BIDUBAIDU Inc10
BMYBRISTOL-MYERS SQUIBB CO.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.