On the 20th birthday of his hedge fund, Citadel, Ken Griffin got kind of emotional (via DealBook).
The letter begins with an anecdote about his grandmother, who was one of the hedge fund’s first investors.
When his grandfather suddenly died in 1963, Griffin’s grandmother had some decisions to make.
“Five well-dressed men from the local bank arrived at my grandmother’s door and offered her a modest sum for the ‘core’ family business.
Surely, they assumed, a widow with two daughters to raise and a farm to run would be eager to sell. They were wrong.”
Instead, grandma Griffin held onto the fuel distribution company and sold it for a ton more than what she was offered that day.
Then he goes on to detail his 2010 lessons-learned, which he breaks down into four main teachings.
- Hire the best people and create a culture of opportunity. Hire people who refuse to take a break. Griffin details one story in this section of an employee who refused to take a day off after working 24/7 for a month on platform integration. He says he suggested taking a break for a day but she declined. Lesson to his current employees: don’t take the bait; he wants you to work “around the clock.”
- Take calculated risks. When an industry is in deep trouble, go in hard and live on the edge. Examples given: Post-Enron, they began trading energy products within days, for the first time. When Long-Term Capital Management faced complete implosion in ’98, he launched fixed income arbitrage strategies. “We will continue to use market dislocations as an opportunity to add talent to our organisation, and to prudently acquire distressed assets,” he told clients.
- Embrace opportunities. Don’t worry, we’re going to be more careful with your money this time around. “While our boldness has served us well,” Griffin wrote, the firm was a touch overconfident in its rebelliousness pre-Lehman collapse – ie. “we were overly confident that we could weather any financial storm.”
- Never lose sight of what is important. Well. That’s a nice one. We hope he remembers that.
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