Kenneth Griffin: Profiling The Billionaire
Kenneth Griffin is the founder of the $24 billion hedge fund Citadel, and he is recognized as one of the most skilled investors in the United States. He got his start in the mid 1980s during college at Harvard University. From his dorm room, he traded stocks using a fax machine, a personal computer and an ordinary telephone. In 1987, he traded short on the stocks he owned to make a significant profit from the financial crash at the end of the Reagan administration. His extraordinary investment skills caught the attention of the successful hedge fund manager Frank Meyer, who gave Griffin $1,000,000 to invest shortly after graduating from college. The investment returned 70 percent to Meyer, and he took Griffin on as a protege.
Griffin created his first hedge fund with $265,000 in cash, including money he borrowed from family members. He used this fund to make a tidy profit from the 1987 stock market crash. In 1989, Griffin graduated from Harvard with a degree in economics, and his reputation was already so established that he became acquainted with the wealthy investor and founder of Glenwood Capital, Frank Meyer. Two years later, in 1990, Griffin founded the hedge fund Citadel with $4.2 million. Griffin chose the name Citadel to convey the idea of steadfast strength in the midst of volatility. As soon as Citadel was founded, it began performing quite well and eventually reached a peak amount of $24 billion. That amount contracted during the 2008 financial crisis, although Griffin was still named one of the wealthiest self-made investors in the world by Forbes magazine.
Forbes has included Griffin in its list of the 400 richest people in the world for the last twenty years of his career. He was worth an estimated $3.7 billion in 2008, and after the financial collapse, he retained more than $2.7 billion of his fortune. Forbes ranked Griffin the 512th wealthiest person in the world in 2011. Most of his fortune has been earned in the last decade, and in 2003, with $265 million, he was featured on the Forbes list of the 400 richest people by the age of 34. He was recognized as the eighth wealthiest self-made American under 40 in 2004. Two years later, in 2006, he was the fifth richest American on the list.
As the hedge fund manager of Citadel, Griffin has earned a staggering amount of money in compensation. In 2004, 14 years after founding the company, Griffin earned $240 million in salary alone. The next year, he earned $210 million, placing him in the top 25 highest-paid managers of hedge funds. However, the next year he earned more than six times as much, taking home $1.7 billion in salary, due to a particularly strong performance of his hedge fund. In 2007, he earned more than 1.5 times that amount at $2.7 billion.
The financial collapse in 2008 caused this string of successes to stall, and his earnings began to decrease, although he had the foresight to invest in credit derivatives, which carried him through the recession. Aside from running Citadel, Griffin is an avid art collector and devoted philanthropist.