Kenneth Griffin, founder and CEO of Citadel, is speaking at The NYTimes Dealbook Conference today. Citadel suffered through a tough time during the recent financial crisis, as assets in its two major funds tumbled. However this year, Citadel’s Kensington Global Strategies Fund and Wellington funds are back up and have exceeded the high watermark, and combined assets are now $9.2 billion. Kensington and Wellington funds have gained 14.3% through the year to the end of the third quarter. The funds use automated trading strategies and focus heavily on algorithms. The public portfolio of Citadel enlists thousands of stocks.
Griffin has been investing in collapsed investment banks post-crisis and it seems those distressed assets are paying off now. A Chicago-based hedge fund, Citadel initiated an investment in GSV Capital Corp (NASDAQ:GSVC), where it bought a 5.3% stake. GSV Capital has nearly 15% of its assets invested in Twitter. Griffin donates to several charitable causes, including Paul Tudor Jones’ Robin Hood Foundation.
Griffin will be interviewed by Andrew Ross Sorkin. Follow our notes from the live coverage here.
Kenneth Griffin starts off with banks, says the banking system is overly concentrated and complex and there is not enough competition. He adds that if he had a magic wand, he would break up the banking system, despite the fact that he does not have a good legal rationale.
He also said that there is room for mid sized banks to grow like, PNC Financial Services Group Inc (NYSE:PNC). “The argument that we live in a world that is bimodal — big banks and community banks — is false, ” Griffin said. Regarding populist anger in movements like Occupy Wall Street, Griffin said he can understand the anger against big banks, but he does not support them.
Regarding his own unsuccessful attempt at starting an investment bank, Griffin said that he realized that we are much more oriented toward acting as a principle than as an agent.
On current fiscal policy in U.S., Griffin said that U.S is making progress in material improvement of the financial system, however one has to wonder about the implications of so many years of injecting cheap money.
Griffin said the Fed’s money printing policy is encouraging people to chase after hot money and is propagating the trend adopting risky trades.
On SAC Capital, Griffin said that Stevie Cohen is facing one of his darkest moments. He said Wall Street has developed a cartel mindset which does not reflect the values of this country. He said the insider trading scandal at SAC Capital has affected the entire hedge fund industry’s reputation.