31-Year-Old Hedge Fund Trader Made More Than The CEOs Of The Six Biggest Banks Combined

Tyler Durden's picture

Over the weekend, there has been some consternation over the report that the CEOs of the 6 largest US banks: JPM, BAC, GS, MS, C and WFC, collectively made $96.1 million in 2013, more than $86.3 million the year before and the most since the financial crisis.

However, we are confident those same people would have an aneurism if they were to learn that James "Jimmy" Levin, a 31-year-old hedge fund trader - head of global credit and an executive managing director at Och-Ziff - last year made a whopping $119 million, or more than all of the CEOs of the six largest firms combined. 

rom Och-Ziff's Proxy filing.

Just who is this trading wunderkind? WSJ's Greg Zuckerman explains:

In 2012, James Levin, a then 30-year old trader at Och-Ziff Capital Management LLC, turned heads with a bet of more than $7.5 billion on “structured credit” debt investments, or about a quarter of the money the firm managed when the investments were made.


The wager was an enormous winner. Mr. Levin’s group scored gains of nearly $2 billion, according to people close to the matter. The trade was detailed in an earlier Wall Street Journal story.


* * *


James Levin, of Och-Ziff Capital Management made a wager in 2012 of more than $7.5 billion on "structured credit" debt investments. That amount represented about a quarter of the money the firm managed when the investments were made.


The bet paid off. Mr. Levin's group scored 2012 gains of nearly $2 billion, or about 25%, before fees—likely making it one of the top trades on Wall Street last year. The credit team, with 14 members, accounted for more than half of the 468-person firm's $3.4 billion trading gains last year, according to people close to the situation.


Mr. Levin and Och-Ziff aren't the only boldfaced investors who scored large gains last year buying investments such as residential mortgage-backed securities and collateralized loan obligations, among others, many of which were crunched in the financial crisis.


The prices of these instruments rallied in 2012 amid the U.S. housing rebound and the hunger by investors for debt with sizable yields, and have risen further in 2013.


Seth Klarman's Baupost Capital, Jeffrey Gundlach's DoubleLine Capital LP and Greg Lippmann's LibreMax Capital LLC are among those who saw hefty returns in 2012. Dozens of smaller hedge funds also racked up sizable gains, as did SkyBridge Capital, which invests in various funds.


* * *


In some ways, Mr. Levin's strategy was riskier than some rivals' because he did less hedging, or protecting against the downside, than some others, according to people close to the matter. Mr. Levin's team was an especially big buyer of investments tied to residential and commercial mortgage-backed securities, traders say.


* * *

Mr. Levin, 31, who goes by Jimmy and is described as outgoing and thoughtful, works closely with David Windreich, Och-Ziff's head of U.S. investing, and Daniel Och, the firm's founder, according to people close to the matter. Mr. Levin first got to know Mr. Och when he taught Mr. Och's son to water ski at summer camp several years ago, before Mr. Levin completed a degree in computer science at Harvard University.

Mr. Och helped him find his first job at Sagamore Hill Capital Management, according to someone familiar with the matter. After a stint as an analyst in the distressed debt and statistical-arbitrage group at Dune Capital, Mr. Levin joined New York-based Och-Ziff in 2006.

And something stunning: "Mr. Levin’s credit team, with just 14 members, accounted for more than half of the 468-person firm’s $3.4 billion trading gains in 2012, according to people close to the situation, as prices of the debt rallied amid a U.S. housing rebound."

What housing rebound?

That said, $120 million on over $1.7 billion in firm profits sounds a little cheap to us. Still, we are confident young Jimmy will be more than happy to collect what amounts to over 2,300 median annual salaries. And all he had to do to facilitate yet another great example of the great US wealth divide in which the rich get super rich while everyone else, well, doesn't, was to correctly forecast that the US economy would continue to deteriorate and that the Fed would continue injecting trillions of  liquidity into the stock market.

What better example of the "value added" activities that are most highly rewarded in US society.

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fonzannoon's picture

at least he is outgoing and thoughtful

SafelyGraze's picture

wow. that's a lot.

only 6% of our return on trillions in loans gets disbursed to our un-named shareholders. 

the surplus is shared with the treasury, against which it can borrow more.


a percent of trillions is actually a very small amount and you shouldn't fret about it.

pay your taxes! 

Caviar Emptor's picture

He, like many others, makes money collecting the crumbs that fall off the big-big cake that the Fed has placed on the table for the grown ups to feast on!

You, like many others, at least can get to see the cake an be graced by the presence of grown ups

Ray1968's picture

I'm sure his personal tax accountant is picking up a few of his crumbs.

ml8ml8's picture

"Mr. Levin's group scored 2012 gains of nearly $2 billion, or about 25%, before fees—likely making it one of the top trades on Wall Street last year."

Uh, say what?  How could a trade returning 25% possibly be one of the "top trades on Wall St." in a year when the S&P 500 was up 29%?  My S&P Indexed mutual fund outperformed one of the top trades on Wall St. by 4%!! Wahoo!!!   /s

Incredibly poor reporting.

Say What Again's picture

You know what Taleb would say about traders that place large bets and win on Wall St.  If not, you should read "Fooled by Randomness" and "The Black Swan."  The thing is, you rarely hear about the many traders that place large bets and lose.  They drift into jobs as bar-tenders, or central bankers.  There will always be stories about some guy that got LUCKY.  NEVER confuse LUCK with TALENT.  I really want to see an annual report on this guy that places over-sized bets.  Lets see what his track record will be over the next 10 to 20 years.

Manthong's picture

Ok.. factor in options, deferred and other obfuscated compensation.

..see what you get now.


..ain't no way a punk is making more than Jamie.


cifo's picture

Isn't this the reason everybody loves America, where everything is possible and one's dreams can come true?

How much did Justin Bieber make last year, btw?


zaphod's picture

The only reason this guy has enough capital to pay with to make these returns is because his creditors know that the FED will bail them out if this hedge fund blows up. That was the bailout of LTCM created. 

This guys captial and returns are backed by us tax payers, but we only participate on the downside and get nothing of the upside.


CheapBastard's picture

The Hedge Fund manager and his team split $2 billion?

Ok, I now see where that recovery is Barry and Bernanke talked about.

willwork4food's picture

Au contraire mon ami. We get great leaders in DC!

'oh wait

PT's picture

The six bankers are just better at hiding what they really make ...

Marco's picture

Heads they win, tails we lose.

OpenThePodBayDoorHAL's picture

No, they're 100% accurate. Wall St massively underperformed the index

ml8ml8's picture

Oops, some bad reporting of my own. The year of the trade returns was 2012 (not 2013).  The S&P only returned 13.4% in 2012.  Notwithstanding, still hard to see how it could have been one of the best trades on Wall St. even in 2012.  Was it the largest amount of money returned?  Possibly, but that's more a function of access to massive capital and leverage than it is of picking the right investment.

Excursionist's picture

Regardless of your math, you're forgeting to risk-adjust the returns for apples-to-apples comparisons.

If presented a choice between a potential 25% return from structured credit and a potential 35% return from equities, I'd opt for the former a 100 times out of a 100.

A 25% return in the credit world is typically considered a home run.

holmes's picture

I'd be very happy with the crumbs of his crumbs.

Gaius Frakkin' Baltar's picture

From their Wikipedia article:
"The firm is reported to have avoided large losses during the financial crisis of 2008..."

Yeah most were, thanks to taxpayer bailouts from poor people. Your welcome.

Groundhog Day's picture

So they made a wager with 25% of their book that they can buy up all the RMBS they can find at a discount and sell it to the fed at par using leverage....gosh had i only gone to HHHAAAAARRVVAARRD

Never One Roach's picture

He sounds like fun. I like him already. I think I saw him at Caesar's Palace ... he's the "outgoing and thougthful" guy at the table.

noless's picture

What is "outgoing and thoughtful" in reference to?

Wahooo's picture

That'll buy a lot of nailguns.

Bangin7GramRocks's picture

A wager. Remember the difference. He is a gambler and he got really lucky once or he has inside information. So check back in 5 years. If he continues to strike it big, he is just another filthy criminal. If he is legit, the returns will return to historical norm. It's that easy.

SteveNYC's picture

He made bank on these "investments" selling them to Bernanke's Fed at a premium? Yeah, really impressive. Money out of thin air to buy the sludge these guys kicked onto the Fed's books via QE"X", a portion of which is then transferred to the individual for facilitating the trade. One day, this will be looked back at as complete insanity.

FuzzyDunlop21's picture

"When asked for his trading strategy, he replied 'BTFD'"

Rubbish's picture

And tell everyone you know.


Let's get ready to rumble this week. More RED....


Gold Bitchez

Skateboarder's picture

Today's FD is tomorrow's FATH, so you might expect a foward-thinking individual to say 'BTFATH,' non?

Yeah, I'll bet on seven billion clownbux too. Will they throw a party for me?

Oh regional Indian's picture

Hey SB, know any node.js geniuses?

Much needed....

thanks, ori

Skateboarder's picture

Hi ORI, I'm not friends with many web developers. I know a great web developer - he's a JS expert. Don't know if he is a 'node.js genius' though. I'm not particularly the best resource for JS inquiries, as I am one of those [real] engineers who look down on JavaScript for being the hacked-together toy language it is (with many security issues). Any webpage I design has been and always will be pure-HTML [+ CSS]. Holding such contempt for this hack of a front-end language that many a career and company (fb, googs, all yer favorite bubble 2.0 companies) have been built on, I can at best talk smack, and at worst talk shit.

Fuck JavaScript.

p.s. will inquire and let you know. He's not cheap - quality stuff.

StandardDeviant's picture

Yeah, I mostly agree -- and love the few remaining pure-HTML [+ CSS] sites out there.  Most sites which depend on JS are rubbish.

If you're willing to hear the case for the defense, though, Douglas Crockford's "JavaScript: The Good Parts" is a good read.

Arius's picture

Takeway: if someone knows water skiing, trust him with everything, including billions

goldhedge's picture

He doesn`t need to commit suicide then.

Snoopy the Economist's picture

"He doesn`t need to commit suicide...yet

Spitzer's picture

And the saddest thought of all is that these dimwits that are riding this tech bubble 2.0 are making off with way more.


He deserves some credit though. His monkey and dart board rules.

Caviar Emptor's picture

Tech bubble 2.0 is so much kewler! Only the kewl kidz need apply!

A_Nejad's picture

Chosen people at their best.....

yogibear's picture

The Federal Reserve the last 5 years has been transferring wealth from savers to Wall Street.

Best thing to do is borrow all you can, buy a asset without a title and then default now. 

You have the asset and they have nothing except the non-performing loan.


nelsonmandella's picture

and guess what he did with his bonus - Bitcoin !

FoodStampPrez's picture

Good thing he is only taxed at 20%, unlike small business owners who produce actual value and pay more than twice that rate. Otherwise we wouldn't have any brilliant computer scientists pushing paper around.

RafterManFMJ's picture

I salute him and appreciate the tools, toys, and medical advances he and his ilk provide.

Truly, these are the best - the best of times.

Caviar Emptor's picture

We're living in a fucking utopia! Back in the day only rock stars could get money for nuthin and chicks for free

zerozulu's picture

when Ctrl-P is the source of the wealth, everything is possible.

I Write Code's picture

But the thing is, Jimmy earned it, after a fashion, he and his little team.

I am much more outraged at the combined CEOs who did NOT earn it, they each head companies of tens of thousands or hundreds of thousands of employees who ALL worked towards any positive results.

Now, there is something structurally wrong when an individual *can* earn nine figures in a year, moving money from place to place.  Really what he did was find a way to dip his bucket into the river of money flowing out of the fed.  He really is stealing public money.  So are the CEOs.

Spitzer's picture


CEO pay in the US is a cultural thing. It is not based on reality. Look at CEO's in Japan. S Korea or China. They simply get paid way less yet they are resposable for more output then these seppo's.


But yeah, I respect this guy more then these tech bubble 2.0 geeks who make him look like a shrimp.

kchrisc's picture

He's a goy, right?!

giggler321's picture

This is great news.  I still have a couple more years to prove social mobility still exists and become an equal to Mr. Levin, give or take a few million of course

kchrisc's picture

Wrong answer. Expropriate their script, socialism, and demand your "share" from Mr. Levin.

I am assuming that he "didn't build that."