Kenneth C. Griffin

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Kenneth C. Griffin

Born 1968
Daytona Beach, Florida
Nationality  United States
Alma mater Harvard University
Occupation Hedge fund manager
Spouse(s) Anne Dias-Griffin

Kenneth C. Griffin (born 1968 in Daytona Beach, Florida) is an American hedge fund manager. Currently, he is Founder, President and CEO of Citadel Investment Group, a Chicago based hedge fund. A self-made billionaire, he founded and propelled Citadel to one of the largest and most successful hedge funds in the world.

Formerly, little was known about Griffin; in previous years he avoided extensive press coverage in a manner similar to other hedge fund managers such as billionaire Steven A. Cohen.[1] In 2008, during a time when the markets were uncertain, Griffin offered his perspective and advice, granting a number of interviews. In May 2008, he commented on the worsening condition of Wall Street saying: “As an industry, we have a responsibility to manage risk in a way that is prudent.” [2].

With over $20 billion in assets under management (AUM), Citadel is one of the world's largest hedge fund managers and its daily trading volume amounts to approximately 3% of average daily trading activity in London, New York, and Tokyo [3]. Griffin has recently reflected on this success commenting: “…When Amaranth needs a partner or Sowood needs a solution or E*TRADE needs capital infusion or the investment banks have a large risk transference trade to do, they come to Citadel…I’m very proud that we have a sterling reputation when it comes to doing what we say we’re going to do” [4].


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[edit] Business career

What can be gathered about Griffin's appearance in the securities market is a remarkable success story. While at Harvard University, he started two funds from his dorm room, and in between classes he would make trades. He even installed a special satellite link to his dorm to acquire real-time market data. After graduating with a degree in economics, he won the attention of an investor named Frank C. Meyer, founder of Glenwood Capital [1]. Meyer was amazed at Griffin's success and rate of return with his investments (which at the time were largely based on convertible bonds), and provided a relatively small investment for Griffin to work miracles with ($1 million) [2]. Griffin exceeded Meyer's expectations, and as word of his wonders spread, investors flocked to Griffin for a piece of his remarkable rates of return. Citadel was officially founded Nov. 1, 1990 with $4.2 million; the name "Citadel" was chosen to suggest strength in times of volatility [3].

With Citadel quickly growing, it began to show uniqueness in the hedge fund world. For those who put their trust in the firm, huge rewards followed as the result of the fund’s distinctiveness, which reflected Griffin’s exceptional investment skills. Citadel's success and immensity is perhaps entirely the embodiment of Griffin's wide range of skills he had before the company was incepted. Griffin could program advanced computer code, write complicated mathematical formulas, and was quiet: Citadel, in a sense, has succeeded by blending the three. Through its employees the firm has brought together mathematicians, physicists, engineers, investment analysts, advanced computer technology, and a high level of confidentiality.

After it became known in 2006 that Citadel Investment Group would be the first hedge fund to issue publicly traded debt bonds, the Financial Times speculated that Kenneth Griffin may now be "the most feared man on Wall Street" [4].

[edit] Wealth

In 1986, Griffin became interested in investing after reading a Forbes Magazine article [5]. After nearly twenty years, Griffin has appeared numerous times in the magazine's Forbes 400; as of 2008, his wealth was estimated at $3.7 billion. Also in 2008, Forbes ranked him the 97th richest American [5].

In 2003, Griffin made his first appearance on the Forbes 400 with $650 million. At 34, he was the second youngest on the list (Ziff Davis heir Daniel Ziff was the youngest) [6] [7]. In September 2004, Fortune Magazine ranked Griffin, who was 35 that year, as the eighth richest American under forty in the category of self-made, US based wealth [8]. Griffin was not yet a billionaire; his net worth was estimated at $825 million [9]. In 2006 Griffin was the 5th youngest of only seven members of the Forbes 400 under the age of 40 [10]. As of 2007, Griffin was the 117th richest American with an estimated net worth of $3 billion.

His 2004 compensation was reportedly $240 million [11], slightly higher than his 2003 compensation ($230 million) [12]. His 2005 compensation was ranked 13th at $210 million [13] among the top 25 highest paid hedge fund managers [14]. Reflecting the success of Citadel, Griffin’s 2007 salary was estimated to reach $1.5 billion [6]. In addition, he resides in a $6.9 million penthouse in Chicago [15].

In 2004, the Financial Times compiled an "alternative rich list" that titled Griffin as the "most precocious" on the list [16], and Fortune Magazine called Griffin "the youngest of the rich hedge fund managers" [17].

As of 2007, Griffin is the 117th richest American with an estimated net worth of $3 billion. [18]

[edit] Controversy

Kenneth Griffin has engaged in an ongoing recruiting rivalry with hedge fund manager Daniel S. Loeb of Third Point.[19] One such hire made by Griffin prompted Mr. Loeb to pen a widely circulated letter stating: "Let me be clear that under no circumstances are you to approach any Third Point employees or attempt to offer them jobs... My warning extends to any attempt you may make to hire employees of my friends in the event driven space: should you attempt to hire people from them I will consider it a similar act of war. My friends' enemies become my enemies." Despite Loeb’s aggressive letter, many other hedge fund managers supported Griffin and his recruitment strategy, often admitting he is able to offer more competitive benefits due to the success of Citadel. David Einhorn, manager of Greenlight, went so far as to extend best wishes to the employee who joined Citadel.[20]

[edit] Art collection

Apart from the business world, the hedge fund pioneer has devoted some of his time to collection and patronage of the arts [21]. He allegedly paid a record price ($60.5 million) for a painting by Paul Cézanne [22] [23], although another source reported that the painting was sold to a member of the Whitney family [24]. In October 2006, Griffin purchased “False Start” by artist Jasper Johns for $80 million from Dreamworks co-founder David Geffen [25]; in the same month he also donated $19 million to the Art Institute of Chicago [26]. A painting by Cézanne and a bronze sculpture by Edgar Degas, both owned by Griffin, are on display at the Institute [27].

In 2004, Kenneth and Anne Griffin were included by Art News in the magazine's ranking of the ten most active art collectors in the world [28].

[edit] Philanthropy

Griffin is a member of several philanthropic boards, including a number of Chicago organizations [29]. As a director of the Chicago Public Education Fund, he has stated, "The long term success of our country depends on the success of our public schools" [30]. In 2003, Griffin was the recipient of the ARK award for his philanthropy [31]. In October 2006, the Griffins and the Bill and Melinda Gates Foundation opened a new charter school in Chicago called Woodlawn High School [32]. Griffin's foundation, Citadel Group Foundation, has contributed to public education [33], the Children's Memorial Hospital in Chicago [34] and the Chicago Symphony Orchestra [35]. Griffin has also made contributions to the Robin Hood Foundation [36] and has served on the committee for the Wall Street Poker Night Tournament, a philanthropic event [37].

[edit] Other Information

Griffin serves on the Advisory Board of Eurasia Group [38], the political risk consultancy, and on the Committee on Capital Markets Regulation [39]. He has also been a member of the G100, a group of 100 CEOs that meets twice a year [40].

In July 2004, Griffin married Anne Dias-Griffin in Versailles [41] (the New York Times, however, reported the wedding occurred in 2003 [42]). Dias is the founder of Aragon Global Management, another Chicago-based hedge fund [43].

In June 2002, Griffin was included in CFO Magazine's Global 100, a list of the most influential people in the world of finance [44]. In June 2005, Griffin commented that the economic and political climate in Russia was now favorable for investors [45]. Griffin has also expressed his belief in the potential of electronic stock exchanges over floor-based ones [46]. Griffin has also commented on the need for clear rules from the SEC regarding market timing and redemption fees [47]. Griffin’s views on regulation and risk played out in a 2008 New York Times article where he was quoted, “’The unwillingness of the Federal Reserve and the S.E.C. to require working capital limits,’ he said, only exacerbates the risk-taking environment because the banks are playing the equivalent of no-limit poker” [2].

[edit] See also

[edit] External links

[edit] Kenneth Griffin

Wikiquote has a collection of quotations related to:

[edit] Forbes rankings

[edit] Citadel Investment Group

[edit] References

  1. ^ Democratizing Hedge Funds
  2. ^ a b Sorkin, Andrew (2008 May 13). "A Wish List for Fixing Wall Street", New York Times. Retrieved on 2008-10-10. 
  3. ^ Citadel
  4. ^ Staff, Staff (2007 April 3). "A hedge fund superstar", Fortune. Retrieved on 2008-10-10. 
  5. ^ Staff, Staff (2008 September 17). "The 400 richest americans", forbes magazine. Retrieved on 2008-10-10. 
  6. ^ Staff, Staff (2007). "private investment funds", alpha magazine. Retrieved on 2008-10-10. 

[edit] Further reading

Peltz, Lois (2001). The New Investment Superstars. Whole chapter: Wiley. ISBN 0-471-40313-X. 

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