Paul Tudor Jones
|Paul Tudor Jones|
Paul Tudor Jones II|
September 28, 1954
Memphis, Tennessee, U.S.
|Residence||Greenwich, Connecticut, U.S.|
|Alma mater||University of Virginia|
|Occupation||Investor, hedge fund manager, and philanthropist|
|Known for||Founding of the Robin Hood Foundation and the Tudor Investment Corporation|
|Net worth||US$4.7 billion (February 2017)|
Paul Tudor Jones II (born September 28, 1954) is an American investor, hedge fund manager, and philanthropist. In 1980, he founded his hedge fund, Tudor Investment Corporation, an asset management firm headquartered in Greenwich, Connecticut. Soon after, he created the Tudor Group, a hedge fund holding company that specializes in fixed income, currencies, equities, and commodities.
As of February 2017, Forbes Magazine estimated his net worth to be US$4.7 billion, making him the 120th richest person on the Forbes 400 and the 22nd highest-earning hedge fund manager. He is known for his large-scale philanthropy and, eight years after founding his hedge fund, he founded the Robin Hood Foundation, which focuses on poverty reduction.
Early life and education
Jones was born in Memphis, Tennessee. He graduated from Presbyterian Day School, an all-boys elementary school, before attending Memphis University School for high school. Jones then went on to the University of Virginia, earning an undergraduate degree in economics in 1976 as well as welterweight boxing championship.
In 1976, he started working on the trading floors as a clerk and then became a broker for E. F. Hutton & Co. In 1980, he went strictly on his own for two and a half profitable years, before he "really got bored". He then applied to Harvard Business School, was accepted, and packed to go when the idea occurred to him that: "this is crazy, because for what I'm doing here, they're not going to teach me anything. This skill set is not something that they teach in business school."
William Dunavant Jr., Jones' cousin and CEO of Dunavant Enterprises, one of the world's largest cotton merchants, introduced Jones to commodity broker Eli Tullis. Tullis hired Jones and mentored him in trading cotton futures at the New York Stock Exchange. Jones later said of Tullis:
He was the toughest son of a bitch I ever knew. He taught me that trading is very competitive and you have to be able to handle getting your butt kicked. No matter how you cut it, there are enormous emotional ups and downs involved.
In 1980, Jones founded Tudor Investment Corporation, an asset management firm headquartered in Greenwich, Connecticut. The Tudor Group, consisting of Tudor Investment Corporation and its affiliates, is involved in active trading, investing, and research in assets across fixed income, currencies, equities, and commodities asset classes and related derivative and other instruments in the global markets for an international clientele. The investment strategies of the Tudor Group include, among others, discretionary global macro, quantitative global macro (managed futures), discretionary equity long/short, quantitative equity market neutral and growth equity.
One of Jones' earliest and major successes was predicting Black Monday in 1987, tripling his money during the event due to large short positions.
Peter Borish was second-in-command to Jones at Tudor Investment Corporation. Jones said Borish anticipated the crash in 1987 because Borish had mapped the 1987 market against the market preceding the 1929 crash, and noted the similarity between the two markets.
Jones previously served as a director of the Futures Industry Association and was instrumental in the creation and development of an education-arm for the association—the then Futures Industry Institute, a research institute later renamed the Institute for Financial Markets based in Washington D.C. Mr. Jones was also an advocate for the design and implementation of the first ethics training course that became the standard for exchange membership on all futures exchanges in the United States.
In February 2013, Forbes Magazine listed him as one of the 40 Highest-Earning hedge fund managers. Although the hedge fund industry standard is two percent per annum of assets under management and twenty percent of the profits, Tudor Investment Corp. charges four percent per annum of assets under management and twenty-three percent of the profits.
Jones' firm currently manages $17.7 billion (as of June 1, 2007). Their investment capabilities are broad and diverse, including global macro trading, fundamental equity investing in the U.S. and Europe, emerging markets, venture capital, commodities, event-driven strategies, and technical trading systems. Jones, with his colleague Hunt Taylor, was instrumental in the creation of FINEX, the financial futures division of the New York Board of Trade, and in the development of the U.S. dollar index futures contract that trades there. He also served as chairman of the New York Cotton Exchange from August 1992 through June 1995.
As reported in Market Wizards and the press, Jones futures trading style and beliefs are as follows:
- Contrarian attempt to buy and sell turning points. Keeps trying the single trade idea until he changes his mind, fundamentally. Otherwise, he keeps cutting his position size down. Then he trades the smallest amount when his trading is at its worst.
- Considers himself as a premier market opportunist. When he develops an idea, he pursues it from a very-low-risk standpoint until he has been proven wrong repeatedly, or until he changes his viewpoint.
- Swing trader, the best money is made at the market turns. Has missed a lot of meat in the middle, but catches a lot of tops and bottoms.
- Spends his day making himself happy and relaxed. Gets out of a losing position that is making him uncomfortable. Nothing’s better than a fresh start. Key is to play great defense, not great offense.
- Never average losers. Decreases his trading size when he is doing poorly, increase when he is trading well.
- He has mental stops. If it hits that number, he is out no matter what. He uses not only price stops, but time stops.
- Monitors the whole portfolio equity (risk) in real time.
- He believes prices move first and fundamentals come second.
- He doesn’t care about mistakes made three seconds ago, but what he is going to do from the next moment on.
- Don't be a hero. Don't have an ego. Always question yourself and your ability. Don't ever feel that you are very good. The second you do, you are dead.
Jones's global macro trading style is based primarily on technical analysis, as opposed to value investing, with an emphasis momentum factors driving markets. In a 2000 interview, he suggested however he regretted not being more involved with venture investing in technology firms during the 1990s.
Wealth and philanthropy
Jones is the founder of the Robin Hood Foundation, a philanthropic organization backed mainly by hedge fund operators. He founded and was the chairman of the board of the Excellence Charter School, the country's first all-boys charter school, located in the Bedford–Stuyvesant neighborhood of Brooklyn, New York. He founded and chaired the Bedford Stuyvesant I Have A Dream Foundation, which puts local students in colleges.
In 1993, Jones co-founded the Everglades Foundation, which advocates for conservation of the Everglades, tropical wetlands in Florida. He chairs the organization’s board, which includes Jimmy Buffett, Jack Nicklaus, David Lawrence Jr., Jon L. Mills, and William Wrigley Jr. II, among others.
In 1986, he adopted a sixth grade class at an underperforming public school by guaranteeing college scholarships to students that graduated from high school. His idea was this would be an incentive to students to engage in academics with his goal being that 90% of those students successfully complete high school. However, only 33% of the students in the class eventually graduated from high school. Jones believed he "vastly underestimated both the academic and social challenges facing [the students in the class he adopted]" and his program was "completely ill-equipped to [help them] in an efficient fashion." In his 2009 speech, Jones explained that this major failure on his part taught him lessons he's applied in subsequent education efforts.
He owns Grumeti Reserves in Tanzania’s Western Serengeti and was recently lauded by the African Great Lakes country's Parliament for not permitting hunting in his reserve. The flagship hotel there, Sasaskwa, was named the #1 hotel in the world by Travel & Leisure Magazine in 2011 and 2012. Jones has been working with Tanzania and Paul Milton of Hart Howerton, a London architectural firm that specializes in large-scale land use, to develop regional plans for the sustainability of the area, its wildlife and its local communities. He has set up a trust for Pamushana a private reserve, operated by South Africa's Singita group, the reserve is about 300 Miles southeast of Harare, near the Mozambique border in Zimbabwe.
Jones has made large donations to his alma mater, the University of Virginia, including a $35 million donation, which went to the construction of a new basketball arena, named the John Paul Jones Arena, in honor of his father, an attorney who also attended the University of Virginia. In April 2012, UVA announced the creation of a new Contemplative Sciences Center through a $12 million gift from Jones and his wife, Sonia.
In June 2012, he was reportedly a key figure in the controversial ousting of University of Virginia President Teresa A. Sullivan. He penned an editorial supporting her resignation. On June 26, 2012, The University of Virginia Board of Visitors unanimously voted to reinstate Sullivan.
Jones moderated the education panel at the 2014 Forbes 400 Philanthropy Summit, which brought prominent labor leaders and reformers in education—U.S. Secretary of Education Arne Duncan, New York Governor Andrew Cuomo, American Federation of Teachers President Randi Weingarten, and Washington, D.C. Schools Chancellor Kaya Henderson—together for a discussion on five ideas to improve schools in the United States and add as much as $225 trillion to U.S. GDP over the next 80 years. Excerpts from the panel were featured in Forbes Magazine's December 2014 Philanthropy issue.
He set up the nonprofit Just Capital to help Americans learn about companies that are considered "just." The organization uses data to discover which companies are most involved with the priorities Americans find most important. The nonprofit uses an annual, multi-phase survey to find out what these priorities are.
A political independent, Jones has donated money to numerous Democratic and Republican candidates. In 2012 he donated $200,000 to Mitt Romney. During the 2008 presidential election, Jones hosted a 500-person fundraiser at his Greenwich home for then-candidate Barack Obama. Jones also donated to John McCain and Rudy Giuliani's presidential campaigns.
Legacy and awards
In 2008, he was inducted into Institutional Investor's Alpha's Hedge Fund Manager Hall of Fame along with David Swensen, Louis Bacon, Steven Cohen, Kenneth Griffin, Seth Klarman, George Soros, Michael Steinhardt, Jack Nash, James Simons, Alfred Jones, Leon Levy, Julian Roberston, and Bruce Kovner.
In 1990, Jones pleaded guilty to illegally filling protected wetlands on his estate, and paid a $2 million settlement.
In 1987, PBS produced a documentary entitled 'Trader' which focused on Jones's activities. The film shows Jones as a young man predicting the 1987 crash, using methods similar to those of market forecaster Robert Prechter. Although the video was shown on public television in November 1987, few copies exist. When copies surface, Jones attempts to buy them up. According to Michael Glyn, the video's director, Jones requested in the 1990s that the documentary be removed from circulation. The video has surfaced from time to time on different video sharing and torrent sites, but has often been taken down shortly thereafter due to copyright claims. Various theories exist as to why Jones does not support the film. Despite the film's showing a positive approach to risk and client care, as well as showcasing Jones's charity work, it has been suggested that the film may reveal trading secrets.
In 2009, Jones delivered a commencement speech at the Buckley School about his experiences with failure and comebacks. He talked about failing to score a single point as a 6th grade basketball player, about a failed engagement, and about getting fired from an early job. He explained that failing to get 86 underserved students into college despite expense and effort later helped him start one of the most successful charter schools in New York.
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