Ken Griffin was facing a calamity.
As Covid-19 roiled the economy in March, equities tanked and bond markets went haywire. Hedge funds run by Griffin’s Citadel were bleeding money as the computer models that guide some of their decisions struggled to comprehend the pandemic.
For Griffin, it was also a chance to profit from some of the biggest opportunities in his 30-year career. His traders went to work scouring beaten-down credit markets, snapping up finance-company debt and taking advantage of wild fluctuations globally.
“It was a macro trader’s dream,” Griffin, 52, said during an event last week for the Robin Hood Foundation, a New York-based non-profit. After taking some losses, Citadel wanted to put money to work “when people are panicking.”
Like many hedge funds, Griffin’s firm lost money during those harrowing days in March, and, like many rivals, also benefited from unprecedented moves by the Federal Reserve and the promise of a $2 trillion stimulus package from Congress. Paul Tudor Jones, who interviewed Griffin at the event, described the Fed’s actions as “so incredible and breathtaking you almost couldn’t even believe it at the time.” So much so, even the legendary hedge fund manager said he didn’t take advantage as much as he should have.
Remarkable Year
Griffin, who started trading convertible bonds from his Harvard University dorm room, did ride those opportunities. His firm’s flagship fund reversed losses in March and has since kept going. His Wellington fund was up more than 19% this year through mid-October and assets at the hedge fund business have swelled to $35 billion. About $6 billion of that belongs to Griffin.
That would make a remarkable year for any investor, but it’s not even the biggest contributor to Griffin’s fortune.
About the same time that the hedge funds went on the offensive, Citadel Securities -- a separate trading part of Griffin’s empire run by Peng Zhao -- largely left its Chicago and New York offices and set up shop at emergency facilities in Connecticut and the Four Seasons Palm Beach in Florida, building a temporary trading floor to keep going during the pandemic.
The business, which makes markets in equities, options, fixed income, commodities and currencies, became one of the biggest beneficiaries in global finance as trading soared. Profit margins rose to 67% in the first half of 2020, a 10% gain compared with the same period last year. It also got a boost from trading on apps like Robinhood Markets, an area where Citadel dominates. Trading revenues exceeded $3.8 billion in the first six months of the year.
Those dual arms of Griffin’s business fueled an almost $5 billion increase in his fortune in 2020 to more than $20 billion, according to the Bloomberg Billionaires Index. The majority comes from Griffin’s estimated 85% stake in Citadel Securities, which is worth $11.2 billion.
A Citadel spokesman declined to comment on Griffin’s wealth, the firm’s performance or valuation.