The hedge fund created in a dorm room

Ken Griffin started trading stocks at 19 from his Harvard dorm, using a rooftop satellite and $265,000 from family and friends. Three years later, he founded Citadel, a hedge fund that now manages over $65 billion.

This week, we explore how Ken Griffin built Citadel into one of the most powerful hedge funds in the world.

• 📡 Trading stocks from his dorm room

• 🏦 Building Citadel into a $63 billion giant

• 📉 Navigating the 2008 market crash

— Investor Briefcase Team

Ken Griffin began investing from his Harvard dorm room, convincing the faculty at Harvard to let him install a satellite dish on the roof to access real-time stock quotes. In his second year of college, he established a hedge fund with $265,000 from family and friends. By 1987, he had formed a second fund, managing around $1 million in assets at just 19 years old. 

His strategy focused on convertible bond arbitrage, a method that exploited pricing inefficiencies to generate consistent returns. The timing couldn’t have been more challenging. In 1987, as Black Monday sent markets into freefall, Griffin held his ground and managed risk carefully. Instead of folding, he delivered strong returns—an extraordinary feat for such a young investor.

His success caught the attention of Frank Meyer, founder of Glenwood Capital, who gave Griffin $1 million to invest on his behalf. Griffin delivered a remarkable 70% return, proving his talent and discipline as a trader.

This early success laid the foundation for Citadel, the hedge fund that would later redefine modern investing.

In 1990, at just 22 years old, Ken Griffin founded Citadel with the backing of investors impressed by his early success and sharp trading skills. Griffin wanted to build a firm that combined risk management with the latest tech to outperform the markets.

From the start, Citadel stood out. Griffin hired top talent and embraced quantitative models to analyze massive amounts of data, uncovering opportunities and managing risk with precision. This technology-first approach gave Citadel an edge, driving rapid growth throughout the 1990s.

The firm’s resilience in volatile markets set it apart. During the 1998 Russian financial crisis, when many hedge funds faltered, Citadel minimized losses and reinforced its reputation for discipline and stability.

By the early 2000s, Citadel was managing billions in assets and had expanded into equities, credit, and global macro strategies. Griffin’s focus on technology, risk management, and performance turned Citadel into one of the most dominant hedge funds in the industry.

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By the mid-2000s, Citadel had firmly established itself as a leader in the hedge fund industry, managing billions in assets and delivering strong, consistent returns. But the firm’s true test came during the 2008 financial crisis. As markets collapsed, Citadel faced significant losses, with its flagship funds down nearly 50%. Unlike many competitors, Griffin refused to liquidate. Instead, he doubled down on his core principles of risk management and discipline, stabilizing the firm and restoring investor confidence.

Citadel bounced back quickly. Within two years, it had recouped its losses and returned to profitability, a recovery that cemented its reputation for resilience. Griffin’s leadership and the firm’s ability to navigate extreme volatility underscored Citadel’s unique position in the market.

Citadel now manages over $65 billion in assets and is recognized as one of the most successful multi-strategy hedge funds in the world. Its strength lies in its ability to adapt, combining advanced technology, quantitative analysis, and top-tier talent to consistently outperform the competition.

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Other famous hedge fund investors

> David Tepper in Appaloosa Management: Tepper, the founder of Appaloosa Management, is known for his aggressive investment style and his ability to generate substantial returns during market downturns.

> Steve Cohen in Point72 Asset Management: Cohen, the founder of Point72 Asset Management, is a legendary figure in the hedge fund world, known for his ability to consistently deliver high returns for his investors.

> Paul Tudor Jones in Tudor Investment Corporation: Jones, founder of Tudor Investment Corporation, is known for his macro trading strategies and his successful prediction of the 1987 stock market crash.

> Carl Icahn in Icahn Enterprises: Icahn, founder of Icahn Enterprises, is a prominent activist investor known for his aggressive investment style and significant influence on various companies.

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