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.
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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.
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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."
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.