December 1, 2023


Business&Finance Specialists

Ken Griffin, financial prodigy turned field big

4 min read

Practically 4 decades ago, the South Florida Sunshine-Sentinel profiled a few precocious associates of the Boca Raton Group Large School’s pc club. Though their classmates were taking pictures hoops, the “disc-drive pushed trio” were prepping for a issue-fixing competition with other Palm Beach geeks later that month.

It is unclear what took place with Satish Vadapalli and Wayne Wong, who worked out the challenges with pen and paper just before passing on answers for their third member to bash into a computer system. But the latter would go on to go away a important mark on the fiscal planet.

Kenneth Cordele Griffin is right now a single of the world’s wealthiest men and women, with a fortune believed at $26.5bn by Forbes. He is mainly identified for operating his $40bn Chicago-based hedge fund Citadel. But in reality, his lesser-recognised however arguably a lot more essential computer system-run trading agency Citadel Securities is now the largest key to his wealth — and mounting controversy.

This 7 days Griffin bought a $1.15bn stake in Citadel Securities to venture money companies Sequoia Money and Paradigm, electrifying the finance sector. The firm is the world’s greatest algorithmic “market-maker”, handling around a quarter of all US stocks bought and sold each working day. Now it is eyeing cryptocurrencies, and a probably first community providing.

The offer valued Citadel Securities at $22bn, incorporating $5bn to Griffin’s web worthy of and lifting him to 26 in the Forbes table of the richest People. Numerous fellow financiers have been agog at the deal.

“What made Michael Jordan Michael Jordan is not just that he jumps better and runs more quickly, he’s sui generis. Ken is very similar in his area,” suggests Lloyd Blankfein, the former chief government of Goldman Sachs and a good friend of Griffin. “He’s a terrific trader, but he’s also a terrific businessperson, and individuals points don’t frequently go alongside one another. It’s like a runner who wins in both equally the 100m dash and a marathon.”

Nonetheless, Griffin has also come to be a magnet for ire. For some he embodies the finance industry and its meant ills. In Chicago his political machinations elevate hackles. Conspiracy-minded retail traders on internet boards this kind of as WallStreetBets portray him as the malevolent head of an evil financial empire, even though the US financial watchdog debunked their statements.

Internally, Griffin is extra respected than beloved, and the society is explained to be brutally extreme, even for Wall Road.

“There’s not a lot of empathy,” a person previous personnel advised the FT previous 12 months. “That can be an asset when issues are going nuts, as I do not consider he feels tension the same way as every person else. There is just this need to be the finest at almost everything, and everybody is either encouraging him achieve that, or not.”

In an FT interview last year, replete with the extended pauses and fully-formed clipped sentences he speaks in, Griffin shrugged off this kind of complaints: “If you’re wired to get pleasure from remaining a fantastic competitor, you adore doing work listed here,” he stated.

There were a number of hints of Griffin’s towering travel in the Sun-Sentinel profile. The 17-yr outdated — captured in spectacles, a disheveled stripy shirt and typical zip-up Adidas jacket — was currently a prodigy at the time.

Active in the laptop or computer club, he was also president of the maths club and a budding entrepreneur. The middle-class teenager had set up a mail-order program organization advertising instructional programmes to higher education professors out of his home, which permitted him to conceal his youth from clients.

His first dalliance with finance arrived in 1980, when the 11-year outdated Griffin wrote a school paper on how he planned to research the stock market. But it was as a Harvard undergraduate that he initially started out buying and selling aggressively, famously convincing his dormitory to allow him set up a satellite dish so he could get up-to-date inventory rates.

The dish was put in just in time for the Black Monday crash of 1987, when Griffin was already handling $265,000. Fortunately, he was betting on stocks falling, and made a killing. Griffin’s returns attracted the interest of hedge fund pioneer Frank Meyer, who bankrolled the start of Citadel.

By 2001, Institutional Investor declared him the “boy speculate” of his business. “Griffin is to hedge resources what pimply confronted dotcom billionaires were being briefly to the Internet: the boy god, nerd created excellent, self-taught polymath of finance,” it wrote. A couple of yrs later on, it all pretty much came crashing down.

Column chart of Annual net returns of Wellington (%). showing Citadel has recovered from a near-death experience in 2008

Despite a name for steering clear of blunders, Citadel lost an astonishing $8bn in the monetary crisis. It was ultimately compelled to freeze trader withdrawals, generally a death knell.

As a substitute, Griffin resurrected Citadel as one of the hedge fund world’s undisputed giants, spun out its high-frequency trading arm as Citadel Securities and created it into a formidable company in its possess ideal. In 2020 Citadel sat fourth on the list of the maximum-grossing cash of all time, with cumulative gains for traders of about $42bn, though Citadel Securities churns out profits from the retail investing growth.

There are several signals that Griffin is particularly anxious by the opprobrium of online message boards. When thousands of cryptocurrency lovers collected above $40m to acquire a scarce to start with-version duplicate of the US Constitution very last 12 months, he outbid them on a whim, causing outrage. The winning bid of $43.2m amounted to considerably less than a few days of Citadel Securities’ investing revenues.

“2008 virtually introduced him down, and he’s rebuilt like a magician. It is phenomenal,” claimed 1 hedge fund govt. “He’s form of like the Elon Musk of funds.”

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