The File on Citadel’s Ken Griffin
He’s the billionaire founder of the Chicago-based hedge fund Citadel. He’s also a philanthropist, a political player, a benefactor of the arts—and a person with a penchant for privacy. So who exactly is Kenneth Cordele Griffin? We scoured public documents, financial records, and other sources to come up with the answer
(page 1 of 12)
In the last ten years or so, Ken Griffin has become one of the most prominent names in Chicago business, philanthropy, and—to a less visible extent—politics. As the founder and head of the Chicago-based hedge fund Citadel, Griffin is reported to be worth $2.3 billion, making him the fifth-richest Chicagoan and 159th-richest American, according to the 2010 Forbes 400, as well as an outlier for the New York–centric hedge fund world. He and his wife, Anne Dias Griffin, have put a huge stamp on the Chicago arts scene, most notably with a $19 million donation for the Modern Wing at the Art Institute. And lately they have been major players in the world of political money: Campaign finance records show that Griffin and his wife have donated more than $3 million to candidates and political action committees—including $450,000 last fall to Republican Bill Brady in the tight 2010 Illinois governor’s race.
Who is this guy who has taken such a significant role in the life of the city? Griffin guards his privacy carefully. While he has participated in several profiles over the years (including one in this magazine in October 2005), he declined an interview for this story through a spokeswoman. Nonetheless, we compiled a dossier of information about Griffin, producing a portrait of a passionate, motivated, and phenomenally rich man.
Griffin married Anne Dias, another hedge fund manager, in 2003; they held their wedding reception at Versailles.
Kenneth Cordele Griffin was born October 15, 1968, and grew up largely in Boca Raton, Florida, with some time in Texas and Wisconsin. He attended Boca Raton Community High School, a public school, where he was president of the math club. He began his investing career while still a Harvard undergraduate, coaxing the school administration into allowing him to install a satellite dish on the roof of Cabot House to receive stock quotes. Griffin’s earliest investment strategy took advantage of a systematic inefficiency in the market for convertible bonds, which are company bonds that can be converted into stock. A 2001 profile in Institutional Investor magazine reported that he got his first fund up and running with $265,000—including money from his grandmother—in time to make a killing from his short positions when the market crashed on October 19, 1987, just days after his 19th birthday. After graduating in 1989, Griffin moved to Chicago to work with the investor Frank Meyer, who ran Glenwood Capital Investments. Meyer entrusted $1 million of Glenwood cash to Griffin, who produced an attention-getting one-year return—The New York Times reported it as 70 percent. The next year, Meyer helped Griffin raise $4.6 million to found Citadel Investment Group (known now as Citadel).
The hedge fund grew rapidly, often making high-profile moves to snap up distressed or unpopular assets. In 2002, Citadel entered into energy trading after the collapse of Enron. When Amaranth Advisors ran into trouble on bad natural-gas investments in 2006, Citadel bought its positions at a steep discount. Citadel peaked at $20 billion in assets in mid-2008.
In the second half of 2008, as the economic crisis that took down the investment banks Bear Stearns and Lehman Brothers deepened, the market for convertible bonds froze up when major financial institutions ran low on cash. Citadel’s assets plunged in value, and Griffin found himself forced to “put up gates” (that is, forbid investors to withdraw their money). Leverage, or borrowing to increase the size of an investment, magnified the losses: In October 2008, in the midst of the crisis, the Chicago Tribune reported that Citadel’s leverage, which had been 7 to 1—that is, it borrowed $7 for each $1 in assets—had diminished to a still-high 4 to 1. The two biggest funds at Citadel finished the year down 55 percent. Although those two funds made up some of the lost ground with 62 percent gains in 2009, they were still down 27 percent over the two years. Citadel now controls about $11 billion in assets. The $9 billion decline from the high-water mark can be attributed to both lowered asset value and withdrawals by investors after the gates came down.
Despite a rough 2008, Griffin acted in 2009 to build an investment-banking operation to take advantage of the market hole left by collapsed i-banks. Citadel issued its first bond in November 2009. It’s not the first time the company has entered into business areas that are unusual for hedge funds—for example, Citadel created and sells administrative services for other hedge funds, although a late-March report indicated it may sell that part of the company to Northern Trust.
In 2003, Griffin married Anne Dias, who runs the hedge fund Aragon Global Management, which deals in communications, financial, and consumer stocks. The publication US Banker reported Aragon’s value as $68 million in 2009, making it the largest hedge fund run by a woman. Their wedding featured a reception at Versailles that Fortune says included performances by Cirque du Soleil and Donna Summer.
Photography: Bill Hogan/Chicago Tribune; Joe Schildhorn/patrickmcmullan.com/Sipa Press/0910302023; Illustration: Lorenzo Petrantoni