The Full Wiki

More info on Kenneth C. Griffin

Kenneth C. Griffin: Map

Advertisements
  
  

Wikipedia article:

Map showing all locations mentioned on Wikipedia article:



Kenneth C. Griffin (born October 15, 1968 in Daytona Beachmarker, Floridamarker) is an Americanmarker hedge fund manager. He is the founder of Citadel Investment Group, a Chicagomarker based investment firm, and remains the President and CEO. The Citadel group of hedge funds rank amongst the largest and most successful hedge funds in the world, and Griffin has earned several billion dollars during his tenure at the company.

For several years Griffin avoided extensive press coverage in a manner similar to other hedge fund managers such as billionaire Steven A. Cohen. As Citadel grew he agreed that the firm would benefit from broader exposure. The result in 2001 was the first in-depth write-up which featured Mr Griffin on the front cover of Institutional Investor magazine, with the tag line "Just 32, he wants to run the world's biggest and best hedge fund. He's nearly there."

More recently, Griffin has adopted a significantly more prominent media profile, appearing as the subject of a Bloomberg magazine cover story, and discussing his art purchases, charitable contributions and political interests in a New York Times interview. In May 2008, he criticised the risk management practices of Wall Street saying: “As an industry, we have a responsibility to manage risk in a way that is prudent... Walk across any of the trading floors -- they are full of 29-year-old-kids. The capital markets are controlled by a bunch of right-out-of business school young guys who haven't really seen that much. You have a real lack of wisdom” . He did not elaborate on the superior wisdom or risk management practices of the hedge fund industry.

With an estimated $13 billion (down from an estimated $20 billion previously) in assets under management (AUM), Citadel remains 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 .

Business career

While still at Harvard Universitymarker, he started two funds from his dorm room, and he claims that 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 [186114]. 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 invest ($1 million) [186115]. Griffin exceeded Meyer's expectations, and as word of his strong performance spread, investors persuaded to back Griffin. Citadel was officially founded Nov. 1, 1990 with $4.2 million; the name "Citadel" was chosen to suggest strength in times of volatility [186116].

With Citadel quickly growing, it began to perform well.For those who invested, huge rewards followed which Griffin attributed to his exceptional investment skills. Specifically, annual performance has been in excess of 20 percent since 1998. [186117] Griffin sought to utilise his own quantitative and numerical skills within Citadel. The firm has attracted mathematicians, physicists, engineers, investment analysts, advanced computer technology, and expects a high level of confidentiality.

After it became known in 2006 that Citadel Investment Group would be the first hedge fund manager to issue publicly traded debt bonds, the Financial Times speculated that Kenneth Griffin may now be "the most feared man on Wall Streetmarker" [186118].

Wealth

In 1986, Griffin became interested in investing after reading a Forbes Magazine article [186119]. 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 .

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) [186120] [186121]. 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, USmarker based wealth [186122]. Griffin was not yet a billionaire; his net worth was estimated at $825 million [186123]. In 2006 Griffin was the 5th youngest of only seven members of the Forbes 400 under the age of 40 [186124]. As of 2007, Griffin was the 117th richest American with an estimated net worth of $3 billion.

His 2004 compensation was reportedly $240 million [186125], slightly higher than his 2003 compensation ($230 million) [186126]. His 2005 compensation was ranked 13th at $210 million [186127] among the top 25 highest paid hedge fund managers [186128]. Reflecting the strong investment performance of his funds, Griffin is reported to have taken home $1.7bn in 2006 and $2.8bn in 2007, of which salary was estimated to reach $1.5 billion in 2007 . In addition, he resides in a $6.9 million penthouse in Chicagomarker [186129].

In 2004, the Financial Times compiled an "alternative rich list" that titled Griffin as the "most precocious" on the list [186130], and Fortune Magazine called Griffin "the youngest of the rich hedge fund managers" [186131].

As of 2007, Griffin is the 117th richest American with an estimated net worth of $3 billion. [186132]

Controversy

Kenneth Griffin has engaged in an ongoing recruiting rivalry with hedge fund manager Daniel S. Loeb of Third Point.[186133] 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.[186134]

In response to criticisms that Citadel had a reputation for being a harsh place to work, Mike Pyles, Citadel's Head of Human Resources stated that "When the markets change, we don't accept lower returns. We aren't that kind of firm. We expect the manager to go and figure out how to make money in the new market. We make no apology for it." [186135]

However, some investors have expressed concern about the impact of Griffin's management style on employee retention and institutional knowledge. Phlip Halpern, the University of Chicagomarker's former endowment manager, has stated "I like to see some broad experience set when I invest in managers. My concern is that Citadel doesn't have that. The turnover has been too high over the years." [186136]

In 2005, at a presentation to Goldman Sachs [186137], Griffin spoke favourably of credit derivatives. "The market for credit derivatives has effectively created a huge new pool of risk-taking capital for our debt markets. By unbundling and trading credit risk without having to transfer the underlying asset, this market has introduced an entirely new and vital way of spreading risk. Credit derivatives, to use one example,let banks transfer risk from their portfolios, allowing them to create new loans. They also provide price transparency into instruments that might otherwise be hard to value. This represents an enormous improvement in our financial system – but one that could not have occurred without the innovation that competitive market dynamics trigger." Subsequent events have led some market observers to question the accuracy of this perspective. [186138]

Indeed, only three years later, Griffin appeared to express a very different opinion in his testimony to the House Committee on Oversight and Government Reform, stating that "[t]he rapid growth in the use of derivatives has created an opaque market whose outstanding notional value is measured in the hundreds of trillions of dollars. As a result, there is great concern about the systemic effects of the failure of anyone financial institution." [186139]

In 2008, in common with many hedge funds, the performance of several of Citadel's key funds including its Kensington and Wellington funds was down 35% in the year to October. However the structure of the manager's compensation in these funds is such that the massive payments reflecting past year's strong performance is not recouped by investors. (For Citadel, it is thought that investors pay expenses of around 7% of funds under management combined with a 20% carry over positive returns).

In a letter to investors, Griffin wrote that `In the weeks to come, I expect we will continue to see significant volatility in our earnings as the world manages through the unfolding crisis. It is incumbent upon us to navigate through this period and to create value for our stakeholders over the years to come. Regrettably I did not foresee the financial disaster that was to unfold in September'.

S&P affirmed the BBB+ ratings on Citadel's main entities - Kensington and Wellington, but revised the outlook from stable to negative.[186140]

Following ongoing market concerns over the performance and liquidity of Citadel and the widening of Citadel credit default swaps from 12% upfront on Sep 30, 2008 to 30% upfront on Oct 23, 2008 Citadel held a conference call [186141] on Oct 24th 2008 with its noteholders stating that performance to date was -35% for Kensington and Wellington and that the fund maintained a liquid cash position in excess of 30% of capital and had undrawn capacity of $8bn in its tri-party credit lines. Based on the 2006 SEC filing at the time of its bond offering, the company's leverage ratio was in excess of 7.8 to 1, although some reports suggest this has been reduced to 4 to 1 presently. [186142] A 2006 report from Dresdner Kleinwort Benson raised concerns that hedge funds could pose systemic risk to the financial markets, using Citadel's disclosed information as a case study and stating that "at face value, and without being able to look into the black box, the balance sheet of today’s Citadel hedge fund looks quite similar to L.T.C.M." [186143]

On 6th Nov 2008, the Wall Street Journal reported that Citadel Investment Group had been asked by several banks to come up with more collateral to cover investment losses. It stated that "Citadel's biggest hedge fund has fallen almost 40 percent this year, causing the company to hold talks with lenders including Goldman Sachs, Deutsche Bank and Merrill Lynch".

Art collection

Apart from the business world, the hedge fund pioneer has devoted some of his time to collection and patronage of the arts [186144]. He allegedly paid a record price ($60.5 million) for a painting by Paul Cézanne [186145] [186146], although another source reported that the painting was sold to a member of the Whitney family [186147]. In October 2006, Griffin purchased “False Start” by artist Jasper Johns for $80 million from Dreamworksmarker co-founder David Geffen [186148]; in the same month he also donated $19 million to the Art Institute of Chicago [186149]. A painting by Cézanne and a bronze sculpture by Edgar Degas, both owned by Griffin, are on display at the Institutemarker [186150].

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 [186151].

Philanthropy

Griffin is a member of several philanthropic boards, including a number of Chicagomarker organizations [186152]. 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" [186153]. In 2003, Griffin was the recipient of the ARK award for his philanthropy [186154]. In October 2006, the Griffins and the Bill and Melinda Gates Foundation opened a new charter school in Chicagomarker called Woodlawn High School [186155]. Griffin's foundation, Citadel Group Foundation, has contributed to public education [186156], the Children's Memorial Hospital in Chicago [186157] and the Chicago Symphony Orchestra [186158]. Griffin has also made contributions to the Robin Hood Foundation [186159] and has served on the committee for the Wall Street Poker Night Tournament, a philanthropic event [186160].

Other information

Griffin serves on the Advisory Board of Eurasia Groupmarker [186161], the political risk consultancy, and on the Committee on Capital Markets Regulation [186162]. He has also been a member of the G100, a group of 100 CEOs that meets twice a year [186163].

In July 2004, Griffin married Anne Dias-Griffin in Versailles [186164] (the New York Times, however, reported the wedding occurred in 2003 [186165]). Dias is the founder of Aragon Global Management, another Chicago-based hedge fund firm [186166]. They have one son.

In June 2002, Griffin was included in CFO Magazine's Global 100, a list of the most influential people in the world of finance [186167]. In June 2005, Griffin commented that the economic and political climate in Russiamarker was now favorable for investors [186168]. Griffin has also expressed his belief in the potential of electronic stock exchanges over floor-based ones [186169]. Griffin has also commented on the need for clear rules from the SEC regarding market timing and redemption fees [186170]. 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” .

See also



Kenneth Griffin



Forbes rankings



Citadel Investment Group



References



External links

Further reading




Embed code:
Advertisements






Got something to say? Make a comment.
Your name
Your email address
Message