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Money Masters: The Most Powerful People In The Financial World

Forbes logo Forbes 12-05-2016

From banking to buyouts, trading to takeovers, these 40 financiers dominate the world of money. The hedge fund managers, private equity moguls and lenders who control the flow of trillions of dollars around the global economy impact just about all of us one way or another. To compile the 2016 Money Masters list, we considered people who run businesses on both the buy and the sell sides of high finance. On Wall Street, money talks, so we judged our candidates on four factors: net worth, assets under management or overseen, three-year track records and influence on markets.

© Forbes 1. Steve Schwarzman, Blackstone Group

Even after a run up in asset prices, the chief of the world's biggest private equity firm is finding ways to put money to work around the world, including recent real estate deals in India, where Blackstone Group now owns 15 million square feet of office space in major cities. "If we end up buying more near a top, that’s never as much fun as buying everything at bottoms,” says Schwarzman. "What's relevant is that you're always outperforming."

© Forbes 2. David Tepper, Appaloosa Management

The legendary hedge fund manager thinks markets have relaxed because of China's more stimulatory policy. “As far as equity markets are concerned, it’s a fair value market that in lieu of any bad events like a British exit or a surprising election result—which is a bit less the case now—you are going to get a U.S. equities market that is going to grind higher," says Tepper. "The question will be at what point will interest rates go up? I think the Fed is going to be very very patient because they have a view that they can contain inflation, but it’s much harder to create inflation in the world. So that is driving my view that they will take their time.” Adds Tepper on the Federal Reserve: “They have said it a million times but the market maybe only now seems to be recognizing that is the case—that they are going to let some degree of inflation come back before they try to kill it.”

© Forbes 3. Jamie Dimon, JPMorgan Chase

The man with the keys to America's largest bank, Dimon oversees an institution that moves $5 trillion a day. JPMorgan is navigating volatile global markets, but Dimon is thinking bigger about bad policies like an outdated tax code, which he says creates more risk than anything on his bank's balance sheet. "We have serious issues that we need to address – even the United States does not have a divine right to success," Dimon said in a letter he wrote in April.

© Forbes 4. Warren Buffett, Berkshire Hathaway

Buffett’s best tip for Forbes readers today? "Read ‘The Intelligent Investor’ and during major market declines,” he says, “read it again.” Buffett has long been a devotee of Benjamin Graham’s book on value investing. In his 2016 investor letter, Buffett told Berkshire Hathaway shareholders that the babies being born in America today “are the luckiest crop in history.”

© Forbes 5. Laurence Fink, BlackRock

Investing is hard enough, but Fink worries the world’s central banks are making it harder with near-zero, and even negative, interest rates. Such actions “are severely punishing the world’s savers and creating incentives to reach for yield, pushing investors into less liquid asset classes and increase levels of risk.” One solution: think long-term. Which is why Fink sent a letter to every S&P 500 CEO calling on them to publish annual strategic plans as a yardstick for investors.

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6. Ken Griffin, Citadel

The successful hedge fund manager is building a big financial firm that also includes a market maker that is the top U.S. equities trader. “Great teams are passionate, they love to solve the important problems of our time, and they want to win," says Griffin. "I’m profoundly fortunate to be part of such a team--a team with the imagination to see what others don’t, the conviction to take a risk and the ability to act before anyone else."

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7. Jeffrey Gundlach, DoubleLine Capital

The bond king is sticking with his dour outlook on junk bonds, especially as energy companies continue their downward spiral. He doesn’t think interest rates will move much and suggests investors stick with intermediate bond funds. He’s also not jumping up and down about the U.S. stock market, which he calls “the last man standing” and expensive. “There are times when capital preservation is a good idea and I think this is one of those times,” says Gundlach.

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8. Carl Icahn, Icahn Enterprises

The activist investor is hedging his stock portfolio while pounding the table for U.S. fiscal moves, like a tax solution that would entice U.S. corporations to repatriate offshore cash. "We need to lift the gridlock in Congress so that we can do some fiscal stimulus because the Fed is holding up this economy by themselves and I don't think it can continue--the odds of that happening are far greater if Trump is elected," Icahn says. "There are unforeseen and detrimental repercussions such as the bubbles that are being formed because of low interest rates."

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9. Lloyd Blankfein, Goldman Sachs

Goldman Sachs is embracing Silicon Valley in an effort to cut costs and uncover new markets. "Technology underpins everything we do," Blankfein said in a February shareholder letter. Recent launches include Symphony, a communications platform some expect can upend the $20,000-a-year Bloomberg Terminal, and Marquee, a coding program for Goldman's trading clients. America's preeminent investment bank is also entering the consumer lending market with an online savings bank.

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10. George Soros, Soros Fund Management

Still a hedge fund heavyweight at 85, Soros knows the only predictable thing about financial markets is unpredictability. For him this means investing in big, often contrarian themes and ideas. He started 2016 betting forcefully against Asian currencies and recently argued that China is ushering in the next global financial crisis by relying too heavily on consumer debt—just like Americans did before the last crash.

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11. Ray Dalio, Bridgewater Associates

The founder of the world’s biggest hedge fund firm sees no reason for a 2008-style debt and economic crisis. “However, with debts high, monetary policy less able to be stimulative and prospective returns of investment assets too low to fund liabilities, I do expect the world economy to be in an extended period of stagnation, with markets having just moderate volatility, much like Japan has had for the last 20 years,” says Dalio. “I also expect significant productivity gains due to big data, big computing and AI, and that these gains will lead to people increasingly replaced by machines, which will increase the already big wealth gap.”

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12. Abigail Johnson, Fidelity Investments

Since becoming boss of the mutual fund giant in 2014, Johnson has championed the actively managed funds Fidelity is known for, despite a stampede into passive funds. A string of recent advertisements featured top portfolio managers who touted “the power of active management” over the long run; A Fidelity study called the perception that active funds can’t beat passive funds “misleading.”

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13. Jorge Paulo Lemann, 3G Capital

Brazil’s richest man has a ravenous appetite for taking iconic food and beverage companies and wringing profits out of them through aggressive cost cuts. The former Wimbledon tennis player has made big bets on Restaurant Brands International, which owns Burger King and Tim Horton, and Heinz, which he bought with Warren Buffett. His latest project: Orchestrating a marriage between Anheuser-Busch InBev and SABMiller.

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14. John Stumpf, Wells Fargo

Wells Fargo has the largest market cap of any U.S bank, but CEO Stumpf runs it with a hefty dollop of Minnesota nice. The Gopher State native used Wells’ 2015 annual report to riff on customer relationships, and even his best advice is more holistic than financial: “There's a difference between knowledge and wisdom. The way you get experience on the way to earning wisdom is to make mistakes.”

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15. John Grayken, Lone Star Funds

One of the world’s biggest investors in distressed assets, particularly real estate, Grayken believes in buying assets cheap and selling as quickly as possible. These days he is fishing for deals in Europe and is not particularly focused on the U.S., which he views as fully priced at this point in the cycle.

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16. Steve Cohen, Point72 Asset Management

With his firm only managing his personal fortune, Cohen believes in diversifying his bets through Point72’s 350 investment professionals that are grouped in dozens of teams by sector of expertise. Recent big stock holdings include Advanced Auto Parts.

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17. James Simons, Renaissance Technlogies

While retired from the pioneering quantitative hedge fund firm he built, Simons still looms large in the minds of most traders who use math, computers and data to try to detect financial market patterns. “We take in terabytes of data a day,” Simons said in a TED interview last year. “You are looking for anomalies—any one anomaly might be a random thing, however, if you have enough data you can tell that it is not.”

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18. Leon Black, Apollo Global Management

Famous for buying downtrodden assets only a private equity billionaire could love, in February Black’s Apollo bought back $250 million of its own shares, then down 50% year-over-year. “We do not believe the current share price of Apollo reflects the strength of our business model and growth opportunities,” said Black. This bet on himself, mimicked by other private equity firms, has so far paid off. Shares are up 25% since.

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19. James Gorman, Morgan Stanley

Don't call it a turnaround, but Gorman has repositioned Morgan Stanley after a near-death during the crisis. “We went from a period of fragility, to healing, to stability. Now we're moving into a period of growth,” he says. Stable wealth management operations are insulating Morgan Stanley from a slow start to 2016. "The wheels don’t fall off in a difficult environment. That is a huge positive,” Gorman notes. He plans to tap the bank's $150 billion in wealth management deposits for a lending business to high net worth clients.

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20. Jonathan Gray, Blackstone Group

The real estate cycle is clearly mature, but the man who runs the world's biggest real estate investment operation says it's too early to call the end. “Supply and demand is still favorable in the U.S. with an economy growing 2% and new supply growing 1%. That’s why you’re seeing rising rents, occupancy and cash flows,” says Gray. He likes areas with the biggest supply deficits, like single-family homes where the pace of new construction remains below what demographics demand.

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21. John Elkann, Exor S.p.A

An heir to the Agnelli fortune, Elkann has transformed the family businesses into a Berkshire Hathaway-esque holding company, Exor S.p.A, with interests ranging from auto's (Fiat Chrysler), machinery (CNH), reinsurance (PartnerRe), media (The Economist) and soccer (Juventus). "As long-term business builders, we invest our permanent capital and deploy management skills in support of talented leaders and companies with global potential," says Elkann.

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22. Mary Erdoes, J.P. Morgan Asset Management

"For many of us who joined the investment industry in the 1980’s and 1990’s, the only markets we have ever known have either been multi-year directional rallies, or concentrated, deep market declines," says Erdoes. "Today we may entering a period like the 1960s and 1970s, where we see non-directional, muted returns over several long stretches of time." What does the chief of the world's sixth biggest asset manager recommend? "Continuous asset allocation work will re-emerge as the most important discussion point, and very focused individual security, sector and regional decisions will be far more important than solely investing in broad market indices in a passive manner."

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23. Henry Kravis, KKR

Kravis shook up America’s pantries with KKR’s 1988 takeover of RJR Nabisco. Three decades later he is again looking to consumers, who he believes are beginning to benefit from lower commodity prices. “Consumers are spending much differently than in the past, choosing to spend on ‘experiences’ rather than ‘things,’” observes Kravis. That’s meant trying to capitalize on household formation and Internet penetration, and personal care segments like healthcare and beauty.

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24. Andreas Halvorsen, Viking Global Investors

Perhaps the most successful hedge fund manager spawned by the organization of the legendary Julian Robertson, Halvorsen has a knack for finding ways to generate good returns. Like many other hedge funds, one of his biggest recent long positions, Valeant Pharmaceuticals, has proven to be a dud. But undisclosed short positions in the energy sector and his continuing big bets on Broadcom and Amazon have been making up for the Valeant misstep.

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25. Howard Marks, Oaktree Capital

The co-chairman of distressed-debt investor Oaktree Capital has seen the assets of his firm grow from $5 billion in 1995 to a nearly $100 billion with a clientele book that includes 74 of the 100 largest U.S. pension funds. Yet Marks is perhaps best known for his memos, where he expounds on the economy, markets, and investment philosophy. His best advice: “Pick your partners and your clients with great care.”

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26. Mark Walter, Guggenheim Partners

Co-founder of a big and growing money manager sees lots of economic challenges ahead. "Of course, opportunities will still present themselves," he says, "especially in areas of changing technologies related to an aging population and the rebuilding of infrastructure."

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27. Jiang Jianqing, Industrial and Commercial Bank of China

It hasn't been easy, but the man who runs the biggest bank in the world is still finding ways to eke out profit gains amid slowing Chinese economic growth. He is trying to keep things in perspective. “From all the economic indicators that have been published to date, I think all point that the Chinese economy is still the engine of the world economy’s growth," Jiang said earlier this year. "Last year China contributed approximately one quarter of the growth of the world's economy."

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28. Daniel Loeb, Third Point

An investor who likes to loudly agitate for corporate change at companies ranging from Yahoo to Dow Chemical, Loeb has quietly posted much steadier investment performance in recent years than most activist investors. He has been betting big on healthcare with activist positions in Baxter International and Amgen. He also keeps pushing for corporate reform in Japan in a huge win just forced the resignation of the CEO of the parent company of 7-Eleven.

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29. Israel Englander, Millennium Management

Cut your losses and let your winners run. With 1,800 employees, Englander’s shop farms out cash to 180 teams. Those who perform well get more cash and those who perform poorly are out—reportedly Millennium recently cut several traders specializing in financial stocks. Englander plays by the same rules and doesn't collect a management fee from investors, solely aligning compensation with investors' returns.

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30. William Conway, Carlyle Group

The private equity pioneer is keeping focused on the big picture. “Don’t underestimate the power of the U.S. economy,” says Conway. “Like a slow-moving freight train, it has underlying strength and momentum—though we expect anemic 1% growth this year, adding an average of 200,000 plus jobs a month over the past five years shows the economy’s staying power.” Adds Conway: “While the Fed has indicated rates are likely to stay low for a while, we’re looking closely at factors such as wages or commodity prices that could cause rates to rise unexpectedly or sharply.”

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31. Paul Singer, Elliott Management

Coming off a huge debt deal with Argentina, the hedge fund manager's advise is to be wary of expert advice. "The important turning points in markets are never identified with precision in advance by 'experts' and policymakers. This lack of foresight is not surprising, because markets and the course of the economy are not model-able scientific phenomena but rather are examples of mass human behavior, which are never predictable with anything like precision,” says Singer. “But what is surprising is that even the most sophisticated investors, traders and commentators continue to rely on predictions issued by those who have no record of success at such forecasts."

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32. Brian Moynihan, Bank Of America

Wall Street's legal eagle, Moynihan has dealt with Bank of America's crisis-era problems, doling out tens of billions in fines and settlements. "We’ve followed a strategy to simplify, rebuild our capital and liquidity, invest in our company and our capabilities," he says. Now, Moynihan is excited about BofA's future. "The American consumer is spending and we see good core business activity so we are well-positioned to help drive the real economy."

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33. Uday Kotak, Kotak Mahindra Bank

The Indian billionaire, who has made his fortune lending to the sprawling masses between Mumbai and Delhi, has taken a stand on behalf of savers. His bank is continuing to offer 6% on savings accounts, even as falling rates make it harder to do so. Kotak is gung ho on his native country and believes investing in India is like a Bollywood movie – long, but with a happy ending.

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34. Pollyanna Chu, Kingston Securities

The billionaire’s bet on her hometown of Hong Kong is paying off. Kingston Securities is benefiting from a new trading link with the Chinese mainland, which has attracted spooked Chinese investors to Hong Kong markets. She’s also counting on the staying power of luxury goods, since snapping up Sincere Watch. Her son runs it, but not without her input. “Taking a backseat role is not in my nature,” Chu told Forbes in 2012.

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35. Yngve Slyngstad, Norwegian Sovereign Wealth Fund

Though the world's biggest pension fund returned just 2.7% in 2015, Slyngstad is staying the course. “We have not been participating in the selling, and we don’t foresee that we will,” he said at a presentation when stocks were falling this winter. Nor is he spooked by the idea of a Brexit: "We will continue to be a significant investor in the U.K. at about the same level as we are today and probably even increasing our investments there going forward no matter what happens.”

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36. Andrew Beal, Beal Bank

Like before the financial crisis, Beal has been curbing his bank’s lending activities because of his concerns. “The financial markets of the world have become a playground for the academic central bankers of the world. We all know how government controlled markets ultimately perform,” says Beal. “It's a huge confidence game and all confidence games always end the same: with a loss of confidence.”

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37. Robert Smith, Vista Equity Partners

The private equity investor remains focused on investing in software. “The fourth industrial revolution is real and it is global,” says Smith. “It relies on companies' ability to harness the data that is captured from real-time interactions that are taking place within the networks of their customers." According to Smith, the key for investors is to identify management that understand this big data dynamic and can create analytically-based products and cognitive solutions.

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38. Joseph Safra, Safra Group

The asset manager of the world’s richest banker is calling for "a far more flexible investment approach" for 2016, saying "stock markets will be overshadowed by political risks and uncertainties." Safra himself is under some uncertainty now that he is facing corruption charges in Brazil. Grupo Safra says there have been no improprieties at any of its business units.

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39. David Booth, Dimensional Fund Advisors

For decades, Booth has been a devotee of Nobel Prize winning economist Eugene Fama and his academic partner, Kenneth French, who are both board members of Dimensional Fund Advisors. Their research says markets are efficient, value stocks generally outperform growth stocks and small caps tend to outperform large. As a result Booth eschews stock picking and holds his positions for a very long time.

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40. James Coulter, TPG Capital

The co-founder and emerging leader of one of the biggest private equity firms, Coulter wants to test new ideas. "Staying on the leading edge means being adaptable and having the skill and conviction to succeed in uncharted territory," he says. "Today, our focus has expanded to disruptors like Airbnb and Uber, microfinance in India and Sri Lanka, troubled loans in Puerto Rico and Italy, and content plays such as Cirque de Soleil, Creative Artists Agency, and STX."

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