Kenneth C. Griffin

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Kenneth C. Griffin (born 1968 in Daytona Beach, Florida) is an American hedge fund manager. Currently, he is Managing Director 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] Recently, more information has become known about Griffin because he has granted more interviews. The secrecy of Citadel also appears to be changing, as rumors of plans to launch an IPO of the firm have surfaced. In addition, the muscle of Citadel is difficult to miss in the financial world; at $16 billion in assets,[2] the fund accounts for 1-3% of trading in Tokyo and New York.

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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 a uniqueness in the hedge fund world. Citadel was a very secretive company, even for a hedge fund; some investors were frightened by Citadel because while it required a large sum of money to join (like all hedge funds), the fund gave little information about what was happening to that money. Citadel also required investors to pay all expenses, and took a substantial 20% of all profits (though it should be noted that rival hedge fund SAC Capital Partners retains a larger 50% share of its investors' profits).

However, for those who did put their trust in the firm, huge rewards followed as the result of other unique qualities of the fund. 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. The firm has brought together mathematicians, physicists, engineers, investment analysts, advanced computer technology, and confidentiality agreements with its employees.

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 now appears in the magazine's Forbes 400; as of 2006, his wealth was estimated at $1.7 billion. Forbes ranks him as the 204th richest American [6] and the 512th richest person globally [7].

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) [8] [9]. 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 [10]. Griffin was not yet a billionaire; his net worth was estimated at $825 million [11]. As of 2006, Griffin is now the 5th youngest of only seven members of the Forbes 400 under the age of 40 [12].

His 2004 compensation was reportedly $240 million [13], slightly higher than his 2003 compensation ($230 million) [14]. His 2005 compensation was ranked 13th at $210 million [15] among the top 25 highest paid hedge fund managers [16]. In addition, he resides in a $6.9 million penthouse in Chicago [17].

In 2004, the Financial Times compiled an "alternative rich list" that titled Griffin as the "most precocious" on the list [18], and Fortune Magazine called Griffin "the youngest of the rich hedge fund managers" [19].

As of 2007, Griffin is the 117th richest American with an estimated net worth of $3 billion. [20]

[edit] Controversy

Kenneth Griffin has engaged in an ongoing recruiting rivalry with rival hedge fund manager Daniel S. Loeb of Third Point.[21] 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."

[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 [22]. He allegedly paid a record price ($60.5 million) for a painting by Paul Cézanne [23] [24], although another source reported that the painting was sold to a member of the Whitney family [25]. In October 2006, Griffin purchased “False Start” by artist Jasper Johns for $80 million from Dreamworks co-founder David Geffen [26]; in the same month he also donated $19 million to the Art Institute of Chicago [27]. A painting by Cézanne and a bronze sculpture by Edgar Degas, both owned by Griffin, are on display at the Institute [28].

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 [29].

[edit] Philanthropy

Griffin is a member of several philanthropic boards, including several Chicago organizations [30]. 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" [31]. In 2003, Griffin was the recipient of the ARK award for his philanthropy [32]. In October 2006, the Griffins and the Bill Gates Foundation opened a new charter school in Chicago called Woodlawn High School [33]. Griffin's foundation, Citadel Group Foundation, has contributed to public education [34], the Children's Memorial Hospital in Chicago [35], and the Chicago Symphony Orchestra [36]. Griffin has also made contributions to the Robin Hood Foundation [37] and has served on the committee for the Wall Street Poker Night Tournament, a philanthropic event [38].

[edit] Other Information

Griffin serves on the Advisory Board of Eurasia Group [39], the political risk consultancy, and on the Committee on Capital Markets Regulation [40]. He has also been a member of the G100, a group of 100 CEOs that meets twice a year [41].

In July 2004, Griffin married Anne Dias-Griffin in Versailles [42] (the New York Times, however, reported the wedding occurred in 2003 [43]). Dias is the founder of Aragon Global Management, another Chicago-based hedge fund [44].

In June 2002, Griffin was included in CFO Magazine's Global 100, a list of the most influential people in the world of finance [45]. In June 2005, Griffin commented that the economic and political climate in Russia is now favorable for investors [46]. Griffin has also expressed his belief in the potential of electronic stock exchanges over floor-based ones [47]. Griffin has also commented on the need for clear rules from the SEC regarding market timing and redemption fees [48].

[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. ^ #117 Kenneth Griffin - Forbes.com

[edit] Further reading

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