Kenneth C. Griffin Biography

Kenneth C. Griffin (born October 15, 1968, Daytona Beach, Florida) is an American hedge fund manager. He is the founder and CEO of Citadel LLC, a Chicago-based investment firm. Citadel's 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. As of 2012, he has an estimated net worth of $3 billion.

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 and started opening up in 2001. More recently, Griffin has adopted a significantly more prominent media profile. He has appeared as the subject of a Bloomberg magazine cover story. He has also discussed his art purchases, charitable contributions, and political interests in a New York Times interview. In 2012, he was opened up about his political views in an interview with the Chicago Tribune. With an estimated $13 billion (down from an estimated $20 billion previously) in assets under management, Citadel remains one of the world's largest hedge funds.

Early career

Kenneth Cordele Griffin was born in 1968 in Daytona Beach, Florida and grew up in Boca Raton, Florida, where he attended Boca Raton Community High School. While still at Harvard University, 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. He got his first fund with $265,000, including money from his grandmother. This allowed him to profit off shorting the 1987 stock market crash.

After graduating with a degree in economics in 1989, he won the attention of an investor named Frank C. Meyer, founder of Glenwood Capital. 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). Griffin exceeded Meyer's expectations and according to the The New York Times Meyer made 70%. As word of his strong performance spread, investors were persuaded to back Griffin. In a video interview on Opalesque.TV Meyer describes the keys of seeding new managers, as he did with Griffin. He says that all managers have strengths and weaknesses.

CEO of Citadel

Citadel was officially founded November 1, 1990 with $4.2 million; the name "Citadel" was chosen to suggest strength in times of volatility. With Citadel quickly growing, it began to perform well.

In 2008, the performance of several of Citadel's key funds including its Kensington and Wellington funds was down 35% in the year to October. The average hedge fund was down approximately 18% in 2008.

Wealth accumulated

In 1986, Griffin became interested in investing after reading a Forbes Magazine article. 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. By 2011, his wealth estimated by Forbes had fallen to $2.3 billion, making him the 512th richest person in the world.

His first appearance on the Forbes 400 was in 2003, with an estimated net worth of $650 million. At 34, he was the second youngest on the list (Ziff Davis heir Daniel Ziff was the youngest). 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 In 2006, Griffin was the 5th youngest of only seven members of the Forbes 400 under the age of 40.

His 2004 compensation was reportedly $240 million, slightly higher than his 2003 compensation ($230 million). His 2005 compensation was ranked 13th at $210 million among the top 25 highest paid hedge fund managers. 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 2007, Griffin was had an estimated net worth of $3 billion.

Reputation

In 2001, the first in-depth write-up featured 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." In June 2002, Griffin was included in CFO Magazine's Global 100, a list of the most influential people in the world of finance.

In 2004, the Financial Times compiled an "alternative rich list" that titled Griffin as the "most precocious" on the list, and Fortune Magazine called Griffin "the youngest of the rich hedge fund managers". After it became known in 2006 that Citadel 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 Street".

Rivalry with Loeb

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

Politics

Overall views

In 2012, he said he was a Reagan Republican. He also said that "This belief that a larger government is what creates prosperity, that a larger government is what creates good: is wrong." He criticized the Democrats in Springfield (capital of Illinois) saying "Let's face it Governor Quinn, Mike Madigan (House Speaker), Cullerton (Senate Majority Leader), they're the majority. And they've been in the majority for a very long time. They've made promises to the citizens of this state, and, in particular, the state government employees, that have been reckless and irresponsible. And the issue is going to be how we best honor the promises that we've made to these employees and yet not bankrupt the state...It is very unfortunate that few politicians have been willing to deal with these issues truthfully, pragmatically and honorably over the last 15 years as this problem has come to the forefront." He has criticized the Obama administration for the Solyndra loans saying "government being involved in picking winners and losers invariably leads to a loss of economic freedom and encourages corruption."

Donations

Individuals

1996

• Daniel Inouye (D-HI) for U.S. Senate

2002

• Rod Blagojevich (D-IL) for Governor of Illinois

2006

• Richard M. Daley (D-IL) for Mayor of Chicago

2009

• Rahm Emanuel (D-IL) for Mayor of Chicago

2010

• Sean Duffy (R-WI) for U.S. House of Representatives
• Eric Cantor (R-VA) for U.S. House of Representatives
• Adam Kinzinger (R-IL) for U.S. House of Representatives
• Bill Brady (R-IL) for Governor

2012

• Mitt Romney (R-MA) for U.S. President
• Scott Brown (R-MA) for U.S. Senate

Organizations

In 2010, he donated $500,000 to American Crossroads, $500,000 to Stand for Children Illinois (pro-education reform), $445,000 to Republicans in the Illinois State Legislature, $140,000 to Two Party System (support for centrists/independents running for state offices)

In 2012, Griffin, and his wife Anne, has given $150,000 to Restore Our Future (Romney Super PAC), $560,000 to the Republican Governors Association, $300,000 to American Crossroads, and $1.5 million to Americans for Prosperity. Overall, Griffin has donated more than $2 million to date to the Super PACs American Crossroads and Restore Our Future.

Views on financial regulations

In 2005, at a presentation to Goldman Sachs, Griffin spoke favorably 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.

Three years later, Griffin testified 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."

In June 2005, Griffin commented that the economic and political climate in Russia was now favorable for investors.

Griffin has also expressed his belief in the potential of electronic stock exchanges over floor-based ones. Griffin has also commented on the need for clear rules from the SEC regarding market timing and redemption fees. 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".

In May 2008, he criticized 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". "We, as an industry, dropped the ball. The industry needs to overhaul its thinking, accept greater regulation."

2012 statement on political influence

When asked if he thought wealthy people had too much influence on politics he explained "I think they actually have an insufficient influence. Those who have enjoyed the benefits of our system more than ever now owe a duty to protect the system that has created the greatest nation on this planet."

Other activities

Art collection

Apart from the business world, the hedge fund pioneer has devoted some of his time to collection and patronage of the arts. He allegedly paid a record price ($60.5 million) for a painting by Paul Cézanne, although another source reported that the painting was sold to a member of the Whitney family.

In October 2006, Griffin purchased "False Start" by artist Jasper Johns for $80 million from Dreamworks co-founder David Geffen; in the same month he also donated $19 million to the Art Institute of Chicago. A painting by Cézanne and a bronze sculpture by Edgar Degas, both owned by Griffin, are on display at the Institute 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.

Philanthropy

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

In October 2009 Griffin and his wife founded the Kenneth and Anne Griffin Foundation, donating $10 million for the Griffin Early Childhood Center and $16 million to Children's Memorial Hospital, among other contributions. The Griffin Early Childhood Center, located in Chicago Heights, is an experimental educational effort run by John List, a University of Chicago economics professor, designed to test whether investing in teachers, or alternatively, in parents, produces better student performance in school.

Board memberships

Griffin serves on the Advisory Board of Eurasia Group, the political risk consultancy, and on the Committee on Capital Markets Regulation. Since 2009 he has served on the board of E-Trade, with a seat on their Risk Oversight Committee. He has also been a member of the G100, a group of 100 CEOs that meets twice a year.

Personal life

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

Kenneth C. Griffin, a Fourth Presbyterian Church member who with his wife Ann donated $11 million to fund the building which was named Gratz after the grandparents of Kenneth C. Griffin.

See also

• Anne Dias-Griffin
• Citadel LLC