Generally there is a small annual fee in addition to a cut of the profits. Profits on huge gaining years seem really high, but you're forgetting the essentially zero profit (or losses) on years with negative or no returns. Those years are not necessarily (and in reality, not at all) the fault of the hedge fund. They still provided a very valuable service in down or break-even years.

Also, managing billions of dollars is hard as shit and requires a ton of expertise and talented managers. You can't just take a hedge fund with $50 million and hand them $4 billion and say "do the same thing, but with more money".