Ken Griffin has been trading stock options since 1986. Of course, at that point, Griffin was trading options out of his dorm room between classes. By his sophomore year, he had enough to launch a convertible-bond arbitrage fund. The market crashed in 1987, just as he was buying. Griffin struck it rich. By his senior year, Griffin had $1 million in investor money for the same strategy. Today, Ken Griffin is a self-made billionaire and his Citadel Investment Group is one of the largest funds in the world.
Ken Griffin founded Citadel Investment Group, officially, on November 1, 1990. It had $4.2 million in assets under management. As of the end of 2013, the fund had grown to $16 billion in assets under management. How did he do it? A combination of advanced computer code, complicated financial algorithms and secrecy. Griffin was using quantitative, technology-based methods before many other firms had cell phones. The fund had been wildly successful until losing 55% during the financial crises; Citadel needed massive returns to recover from that hole. Most hedge funds would have closed its doors, but Griffin went to work. By the start of 2012, he cleared the high water mark, his efforts culminating in returns over 20% in 2011. Citadel’s main funds are called Kensington and Wellington. These funds returned almost 25% in 2012 and 19.4% in 2013. |
Ken Griffin’s hedge fund continued its strong performance in 2014, returning 3.4% through the end of January.