John D. Arnold

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John D. Arnold
Born John Douglas Arnold
1974 (age 42–43)
Dallas, Texas
Alma mater Vanderbilt University
Occupation Investor, former hedge fund manager
Net worth Increase $2.8 billion (March 2013)[1]
Spouse(s) Laura Muñoz
Children 3

John Douglas Arnold (born 1974) is an American billionaire and former hedge fund manager who specializes in natural gas trading. His firm, Centaurus Advisors, LLC, was a Houston-based hedge fund that specialized in trading energy products.[2][3] Arnold announced his retirement from running the hedge fund on May 2, 2012.[4][5][6][7][8]

Early life[edit]

Arnold was raised in Dallas, Texas, and he was the younger of two sons. Like Arnold, his brother, Matthew, also traded at Enron.[4] His father was a lawyer, and his mother worked as an accountant at Arnold's Centaurus.[4][9] His father died when Arnold was 17.[4][9] In 1995, he graduated from Vanderbilt University with a degree in mathematics and economics.[9] He is a member of Lambda Chi Alpha.[10]

Career[edit]

Enron[edit]

After college, he began his career at Enron as an oil analyst but was soon promoted to assistant trader.[9] In 1996, he moved over to the Natural Gas Desk upon the departure of Jeff Bussan[11] and started trading natural gas derivatives.[9] Using their new Internet-based trading network, EnronOnline,[citation needed] he is credited with making three quarters of a billion dollars for Enron in 2001 and was rewarded with an $8 million bonus.[9][12] One of his former colleagues dubbed him "king of natural gas."[13][14][15]

Centaurus[edit]

When Enron collapsed in 2002, he founded Centaurus with his previous year's bonus. According to Arnold, "After Enron collapsed, there was a general revaluation of credit risk among energy companies. The better credits were less willing to take on the lesser credits as counter parties. So the lesser credits found themselves with fewer counter parties willing to trade with them, even though they still needed to hedge the pricing risks in their business. Hedge funds previously had not been involved in the over-the-counter market, except for the very largest, because the other participants were reluctant to grant credit to that type of entity."[16]

During the collapse of Amaranth Advisors, Centaurus is widely credited as being one of the major players on the other side of their position, and returning as much as 150% in 2005.[17]

At an energy conference, Arnold stated that he looks "to place bets on a market that he determines is 'biased'... we ask ourselves can we identify what is forcing a market to price a product at an unfair value, and then, what will push it back to fair value." Arnold also referred to the speculative trading that was taking place on the unregulated over-the-counter Intercontinental Exchange (ICE) and NYMEX's Clearport Trading: "Trading never went away... what has changed is the non-commercial type of interest... because of this there has never been as much investor interest as there is today."[18]

During August 2008, Centaurus acquired around 10% of the shares of National Coal Corporation (NCOC).[19]

Arnold gave a public speech to the U.S. Commodity Futures Trading Commission (CFTC), in which he opposed limits on financially settled trading positions but supported limits in the physical energy futures as they near expiration. Arnold said, "I try to buy things whenever they're trading below what [our] analysis shows to be fair value and sell things whenever our analysis shows that the forward curve is higher than our analysis of fair value." [20][21][22]

Philanthropy[edit]

The Laura and John Arnold Foundation is a private foundation founded by Arnold and his wife Laura.[23] The organization was founded in 2008, the same year that the Arnolds signed the Giving Pledge, a pledge by some high-net-worth individuals to donate a large fraction of their income to philanthropic causes during their lifetimes.[24]

The foundation has focused its donations on the issues of reforming K-12 education, public pension reform, improving the criminal justice system, and improving reproducibility in science.[23]

Personal life[edit]

Arnold is married to Laura Elena (Muñoz) Arnold. Laura Arnold is co-chair of the Laura and John Arnold Foundation, and was formerly an attorney in Houston, Texas and an oil company executive. She is a graduate of Harvard College, Yale Law School and has a Master of Philosophy degree in European Studies from the University of Cambridge.[25] They have three children.[26]

References[edit]

  1. ^ Forbes: The World's Billionaires - John Arnold March 2013
  2. ^ Ahmed, Azam (2012-05-03). "John Arnold Is Said to Close Hedge Fund and Return Investor Money". The New York Times. Retrieved 2013-10-08. 
  3. ^ Kumar, Nishant (2013-05-02). "Hedge fund Centaurus to return cash, shut Asia office: source". Reuters. Retrieved 2013-10-08. 
  4. ^ a b c d "When a billionaire trader loses his edge - The Term Sheet: Fortune's deals blogTerm Sheet". Finance.fortune.cnn.com. 2012-05-04. Retrieved 2013-10-08. 
  5. ^ "Houston billionaire trader John Arnold retiring at 38 - Houston Chronicle". Chron.com. 2012-05-02. Retrieved 2013-10-08. 
  6. ^ Kate Kelly (2012-05-02). "Legendary Energy Trader John Arnold to Retire". Cnbc.com. Retrieved 2013-10-08. 
  7. ^ Kroll, Luisa. "Hedge Fund Billionaire John Arnold's Fund Was Up When He Announced He Was Getting Out". Forbes. Retrieved 2013-10-08. 
  8. ^ "Ex-Trader at Enron to Retire From Hedge Fund - WSJ.com". Online.wsj.com. Retrieved 2013-10-08. 
  9. ^ a b c d e f New York Times: "CORPORATE CONDUCT: THE TRADER; Enron Trader Had a Year To Boast of, Even If..." By DAVID BARBOZA July 09, 2002
  10. ^ "Lambda Chi Alpha - Notable Alumni". lambdachi.org. 2013-08-14. Retrieved 2013-10-08. 
  11. ^ "A speculator who is in for the long haul". Financial Times. May 14, 2008. 
  12. ^ New York Times, "Energy Trading, Post-Enron", January 15, 2006
  13. ^ "'King of Natural Gas' John Arnold retiring". MarketWatch. Retrieved 2013-10-08. 
  14. ^ Vardi, Nathan. "The King Of Natural Gas Quits". Forbes. Retrieved 2013-10-08. 
  15. ^ Demos, Telis (2009-11-24). "Centaurus's John Arnold: The king of natural gas - Nov. 24, 2009". Money.cnn.com. Retrieved 2013-10-08. 
  16. ^ "Futures & Options Trading for Risk Management - CME Group". Nymex.com. Retrieved 2013-10-08. 
  17. ^ Tett, Gillian (2006-12-20). "Smart trades that made this a good year for some". FT.com. Retrieved 2013-10-08. 
  18. ^ "The Role of Market Speculation in Rising Oil and Gas Prices: A Need To Put The Cop Back On The Beat" (PDF). Hsgac.senate.gov. Retrieved 2013-10-08. 
  19. ^ Houston Business Journal, "Centaurus scoops up National Coal shares" August 29, 2008
  20. ^ Demos, Telis (2009-11-24). "Centaurus's John Arnold: The king of natural gas - Nov. 24, 2009". Money.cnn.com. Retrieved 2013-10-08. 
  21. ^ "Energy Trading Mogul Warns on Trading Limits". The New York Times. 2009-08-05. Retrieved 2013-10-08. 
  22. ^ "John D. Arnold's CFTC (U.S. Commodity Futures Trading Commission) speech" (PDF). Cftc.gov. Retrieved 2013-10-08. 
  23. ^ a b Apple, Sam (January 22, 2017). "The Young Billionaire Behind the War on Bad Science". Wired. 
  24. ^ Preston, Caroline (October 16, 2011). "A Thirtysomething Billionaire Couple Take on Tough Issues Via Giving". Chronicle of Philanthropy. 
  25. ^ Baylor College of Medicine: "Laura Arnold named to BCM Board of Trustees" by Lori Williams September 26, 2008
  26. ^ "Our Team | Laura and John Arnold Foundation". Arnoldfoundation.org. Retrieved 2013-10-08. 

External links[edit]