10 Investors Who Made the Most Profits Using Leverage

Leverage, or borrowing money to expand the size of an investment, is a powerful financial tool that many top global investors have used to generate massive returns. While leverage carries high risks, if used strategically with accurate market analysis, it can lead to significant profits. In this article, we’ll explore five investors who successfully used leverage to make remarkable profits.

1. George Soros

George Soros : Credit Fabrice Coffrini/Agence France-Presse — Getty Images

George Soros is one of the most effective users of leverage in financial history, best known for Black Wednesday in 1992. Soros used massive leverage to short the British pound, borrowing over $10 billion to bet that the pound would weaken. He earned over $1 billion in just one day, earning the nickname “the man who broke the Bank of England.” read more about Black Wednesday 

2. John Paulson

John Paulson.David Grogan | CNBC

John Paulson became famous for his bets during the 2007 Subprime Mortgage Crisis. He used leverage to buy Credit Default Swaps (CDS), betting that the U.S. housing market would collapse. Leverage allowed him to invest with minimal capital and receive enormous returns. He made over $15 billion in profit that year alone, becoming one of the most successful investors to profit from that crisis.

3. Paul Tudor Jones

Paul Tudor Jones has an uncanny knack for finding winning investments. Kevin Mazur/Getty Images for Robin Hood

Paul Tudor Jones is famous for predicting the Black Monday crash in 1987, using leverage to short various assets in the futures market. When the stock market crashed by 22% on October 19, 1987, Jones earned over 100% returns in his portfolio that year. His use of leverage turned him into a legend in the financial world.

4. Jim Chanos

Jim Chanos: ‘The story is that although the cloud is growing, the cloud is [the data centres’] enemy, not their business © Misha Friedman/Bloomberg

Jim Chanos is known for his use of leverage to short the stock of Enron, one of the largest bankruptcy cases in history. Chanos used leverage to short Enron's stock, predicting the company would collapse due to accounting fraud and internal corruption. When Enron went bankrupt in 2001, Chanos made enormous profits through his leveraged investment.

5. Stanley Druckenmiller 

Photo: Getty Images

Stanley Druckenmiller worked alongside George Soros during Black Wednesday in 1992 and played a key role in leveraging Soros' position to short the British pound. Druckenmiller helped Soros effectively plan the use of leverage for that major bet. Afterward, Druckenmiller continued to use leverage effectively in global markets, generating consistent profits over decades.

6. Carl Icahn

Carl Icahn's firm has been under investigation since at least last spring. Heidi Gutman—CNBC via Getty Images

Carl Icahn is known for his aggressive style of investing, often using leverage to acquire large stakes in companies to influence corporate decisions. Icahn made substantial use of leverage in his famous takeover of TWA (Trans World Airlines) in 1985, borrowing heavily to finance the acquisition.

Although the airline eventually filed for bankruptcy, Icahn walked away with hundreds of millions in personal profit by stripping the company's assets and selling its most valuable parts. His use of leverage and activist investing made him a billionaire and one of Wall Street’s most feared investors.

7. Ray Dalio

Ray Dalio, founder of Bridgewater Associates. Eugene Gologursky/Getty Images for Fast Company

Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, is known for using leverage in a balanced and strategic way. Dalio’s "Pure Alpha" fund, which aims to generate consistent returns regardless of market conditions, uses leverage to amplify returns on low-risk assets.

His use of leverage, combined with deep analysis of macroeconomic trends, has helped Bridgewater manage billions of dollars and deliver consistent returns, making Dalio one of the wealthiest hedge fund managers in the world.

8. Bill Ackman

Credit: Tracy Tolf

Bill Ackman, the founder of Pershing Square Capital Management, has frequently used leverage in his high-profile bets. One of the most notable examples is his investment in Allergan in 2014, where Ackman partnered with Valeant Pharmaceuticals in a leveraged hostile takeover bid.

While the takeover didn’t succeed, Ackman’s Pershing Square made significant profits from the sharp rise in Allergan’s stock price, which soared after another company, Actavis, acquired it. Ackman’s use of leverage in aggressive campaigns has earned him billions, although it has also resulted in significant losses in some cases.

9. David Tepper 

David Tepper, founder and president of Appaloosa Management. Cameron Costa | CNBC

David Tepper, the founder of Appaloosa Management, is known for his opportunistic investing during times of market distress. Tepper made one of his biggest profits during the 2009 financial crisis by using leverage to buy heavily discounted bank stocks and distressed debt, including shares of Bank of America and Citigroup.

Tepper used leverage to amplify his returns on these high-risk bets and ended up making billions when the market rebounded. His ability to take calculated risks with leverage has made him one of the most successful hedge fund managers.

10. Warren Buffett 

Berkshire Hathaway CEO Warren Buffett. Daniel Zuchnik—WireImage

Although Warren Buffett is generally known for his conservative and long-term value investing approach, he has used leverage in subtle ways throughout his career. One of Buffett’s most effective uses of leverage is through his insurance companies, particularly Berkshire Hathaway’s subsidiaries like GEICO. Buffett invests the "float" from insurance premiums—money that doesn’t belong to him but is temporarily under his control—into high-return assets.

This is a form of leverage because he uses borrowed capital to amplify investment returns without taking on significant debt himself. This strategy has helped Buffett grow Berkshire Hathaway into a conglomerate worth hundreds of billions of dollars.

Conclusion

These investors demonstrate that leverage, when used strategically and with careful analysis, can amplify returns and lead to substantial profits. From corporate takeovers to distressed asset investing, leverage plays a pivotal role in how some of the world’s most successful investors build their wealth.

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