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Ken Griffin’s biography: What is his investment style?

3 min. reading
Ken Griffin / 5 July, 2021

Edgar Mondragón Tenorio Journalist

“Risk is what you make of it.”

Ken Griffin

A brilliant young man

In 1987, a young Harvard student with only two years of college and 19 years of age, founded his first hedge fund in his dorm room, with the money obtained from his grandmother, friends and acquaintances.

Kenneth C. Griffin was born on October 15, 1968 in the state of Florida, in Daytona Beach County. As a teenager, during his time at Boca Raton Community High School, he served as president of the math club. This particular trait would define the way he made his fortune.

A passion for finance

With the $265,000 dollars he managed in his fund, he managed to benefit from the Black Monday of 1987, which allowed him to deliver profits to those who trusted in his talent and, in addition, to start managing a second fund.

His enthusiasm was such that he managed to convince his authorities at Harvard to let him install an antenna with which he could monitor stock prices on the stock market in real time, despite the fact that the installation of devices other than those established by the university was forbidden.

In 1989 he graduated from college with a degree in economics and a reputation that attracted the attention of a famous manager of the time, Frank C. Meyer, founder of Glenwood Capital, who decided to test Griffin’s expertise by giving him a million dollars to manage.

In response, Ken Griffin far exceeded expectations by delivering a 70% return within a year. This feat earned him the interest of several firms to back him and provide capital for him to manage and grow.

Citadel LLC

As a result, Griffin founded Citadel LLC on November 1, 1990, in the Illinois city of Chicago, with an initial capital of $4.2 million, and is today one of the largest hedge funds in the world.

Through his firm, Griffin is estimated to have generated more than $28 billion in profits with an average annual return of 20% for his clients.

However, despite his great ability with numbers, Griffin failed to foresee the hecatomb of the 2008 financial crisis. This mistake brought him to the brink of bankruptcy.

In the panic generated by the rapid loss of value of his funds over sixteen weeks, Griffin had to prohibit his investors from withdrawing their money for almost a year. This action gave him enough time to change his strategy and start generating profits again.

“It took me three years to recover everything I lost in just sixteen weeks in 2008,” Griffin said in an interview regarding his lack of vision to prevent the subprime disaster. Today, however, Citadel LLC manages about $13 billion and is one of the world’s most successful hedge funds.

What is his investment style?

Unlike other famous investors, Griffin has remained very tight-lipped about his investment strategies and decisions. Despite this, it is no secret that Griffin has a penchant for quantitative investment techniques, stemming from his love and ease with mathematics.

We know that he himself oversaw selecting the best profiles from different disciplines, not only economic and financial, but also physicists, actuaries, engineers, among others. He hires these profiles to generate mathematical models that help him define winning trading strategies to manage his funds.

We also know that he does not limit himself in investment options as his management philosophy is to create strategies that include stocks, bonds, commodities, currencies, macro strategies, and he has even made public his interest and recent bet on Bitcoin.

Griffin is not afraid to take risks, even less if he has a mathematical backing to support his decisions, so he also manages strong leverage strategies, approximately, for every dollar he receives from his clients, he gets seven dollars borrowed to increase profits, but this can also increase losses.

Ken Griffin today

Today, Griffin remains CEO of Citadel LLC, is an avid philanthropist, giving money to social causes, political causes, and continues to support his alma mater for education. He is also a great collector of art and homes, is the richest person in Chicago and a great example for anyone who wants to follow the path of finance.

 

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