John Paulson, founder of the hedge fund Paulson & Company, made an unprecedented $3.7 billion last year by betting against subprime mortgages and the financial products that held them.

Paulson took the top place in Institutional Investor's Alpha magazine's ranking of the 50 most highly paid hedge fund managers. George Soros ranked second with $2.9 billion and James Simons came in third place with $2.8 billion in earnings. The top 25 managers on the list earned an average of $892 million.

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