Practically 4 many years in the past, the South Florida Solar-Sentinel profiled three precocious members of the Boca Raton Group Excessive College’s laptop membership. Whereas their classmates have been capturing hoops, the “disc-drive pushed trio” have been prepping for a problem-solving competitors with different Palm Seaside geeks later that month.
It’s unclear what occurred with Satish Vadapalli and Wayne Wong, who labored out the challenges with pen and paper earlier than passing on options for his or her third member to bash into a pc. However the latter would go on to depart a serious mark on the monetary world.
Kenneth Cordele Griffin is as we speak one of many world’s wealthiest folks, with a fortune estimated at $26.5bn by Forbes. He’s largely identified for working his $40bn Chicago-based hedge fund Citadel. However in actuality, his lesser-known but arguably extra essential computer-powered buying and selling agency Citadel Securities is now the most important key to his wealth — and mounting controversy.
This week Griffin sold a $1.15bn stake in Citadel Securities to enterprise capital companies Sequoia Capital and Paradigm, electrifying the finance business. The agency is the world’s greatest algorithmic “market-maker”, dealing with over 1 / 4 of all US shares purchased and bought every single day. Now it’s eyeing cryptocurrencies, and a possible preliminary public providing.
The deal valued Citadel Securities at $22bn, including $5bn to Griffin’s web value and lifting him to 26 within the Forbes desk of the richest People. Many fellow financiers have been agog on the deal.
“What made Michael Jordan Michael Jordan is not only that he jumps larger and runs quicker, he’s sui generis. Ken is analogous in his area,” says Lloyd Blankfein, the previous chief govt of Goldman Sachs and a good friend of Griffin. “He’s a terrific dealer, however he’s additionally a terrific businessperson, and people issues don’t typically go collectively. It’s like a runner who wins in each the 100m sprint and a marathon.”
Nonetheless, Griffin has additionally change into a magnet for ire. For some he embodies the finance business and its supposed ills. In Chicago his political machinations raise hackles. Conspiracy-minded retail buyers on web boards corresponding to WallStreetBets painting him because the malevolent head of an evil monetary empire, although the US monetary watchdog debunked their claims.
Internally, Griffin is extra revered than liked, and the tradition is claimed to be brutally intense, even for Wall Road.
“There’s not a whole lot of empathy,” one former worker instructed the FT final yr. “That may be an asset when issues are going loopy, as I don’t assume he feels stress the identical method as everybody else. There’s simply this want to be the most effective at all the things, and everyone seems to be both serving to him accomplish that, or not.”
In an FT interview final yr, replete with the lengthy pauses and fully-formed clipped sentences he speaks in, Griffin shrugged off such complaints: “If you happen to’re wired to take pleasure in being a very good competitor, you like working right here,” he mentioned.
There have been a number of hints of Griffin’s towering drive within the Solar-Sentinel profile. The 17-year previous — captured in spectacles, a matted stripy shirt and traditional zip-up Adidas jacket — was already a prodigy on the time.
Lively within the laptop membership, he was additionally president of the maths membership and a budding entrepreneur. The center-class teenager had arrange a mail-order software program agency promoting academic programmes to school professors out of his dwelling, which allowed him to cover his youth from clients.
His first dalliance with finance got here in 1980, when the 11-year previous Griffin wrote a school paper on how he deliberate to review the inventory market. But it was as a Harvard undergraduate that he first began buying and selling aggressively, famously convincing his dormitory to let him install a satellite dish so he may get up-to-date inventory costs.
The dish was put in simply in time for the Black Monday crash of 1987, when Griffin was already managing $265,000. Thankfully, he was betting on shares falling, and made a killing. Griffin’s returns attracted the eye of hedge fund pioneer Frank Meyer, who bankrolled the launch of Citadel.
By 2001, Institutional Investor declared him the “boy wonder” of his business. “Griffin is to hedge funds what pimply confronted dotcom billionaires have been briefly to the Web: the boy god, nerd made good, self-taught polymath of finance,” it wrote. A number of years later, all of it virtually got here crashing down.
Regardless of a status for avoiding errors, Citadel misplaced an astonishing $8bn within the monetary disaster. It was ultimately pressured to freeze investor withdrawals, typically a dying knell.
As an alternative, Griffin resurrected Citadel as one of many hedge fund world’s undisputed giants, spun out its high-frequency buying and selling arm as Citadel Securities and constructed it right into a formidable firm in its personal proper. In 2020 Citadel sat fourth on the listing of the highest-grossing funds of all time, with cumulative positive factors for buyers of about $42bn, whereas Citadel Securities churns out earnings from the retail buying and selling growth.
There are few indicators that Griffin is especially involved by the opprobrium of web boards. When hundreds of cryptocurrency fanatics collected over $40m to purchase a uncommon first-edition copy of the US Structure final yr, he outbid them on a whim, inflicting outrage. The successful bid of $43.2m amounted to lower than three days of Citadel Securities’ buying and selling revenues.
“2008 almost introduced him down, and he’s rebuilt like a magician. It’s phenomenal,” mentioned one hedge fund govt. “He’s sort of just like the Elon Musk of cash.”