How Bruce built the fortune
Bruce Kovner is one of the pioneers of global macro investing, a style in which a fund trades currencies, interest rates, commodities and stock indexes around the world based on views about economic policy and capital flows. He came to it late and from an unlikely direction. In his early thirties, after academic work in political science, he began trading commodity futures with a small amount of borrowed money, reportedly financed in part by a credit card advance. His first meaningful gains came from trading soybean futures, and the experience convinced him he had found his profession.
He joined Commodities Corporation in Princeton, a firm known for training and backing independent traders, and quickly became one of its most successful members. In 1983 he set up his own firm, which became Caxton Associates. Caxton grew into one of the largest hedge fund managers of its era, known for steady long-term returns with relatively few severe losing years. Its scale and consistency made it a favoured home for institutional and wealthy private investors.
As founder and principal owner, Kovner earned a large share of management and performance fees for almost thirty years and kept substantial amounts of his own capital in the funds. That combination of fee income and compounding personal investment is the basis of his wealth.
Kovner's trading reputation rested on risk control as much as on bold views. He became widely known after being profiled in a well-regarded book of interviews with top traders, in which he emphasized careful position sizing and the importance of knowing in advance where a trade would be abandoned. Caxton was also notable for the length of its track record, which spanned several financial crises and periods of extreme currency volatility.
Companies and holdings
Kovner's main business creation is Caxton Associates, which he led as chairman and chief executive until 2011, when he retired from running the firm and handed management to Andrew Law. He then founded CAM Capital, a family investment office that manages his own wealth and makes long-term investments in public and private markets.
His holdings are therefore largely financial: investments managed through CAM Capital, his remaining connections to Caxton, and real estate in New York. He has also invested in a range of private companies through his family office.
CAM Capital reflects a common path for founders of large hedge funds. After decades of managing outside money, Kovner chose to manage only family capital, which removed the reporting obligations and client pressures of a public-facing fund while letting him keep investing in markets he knew well. The firm has been described as taking a long-term, value-oriented approach rather than the fast trading style that defined Caxton's early years.
Early life and career
Kovner was born in 1945 in Brooklyn, New York, and grew up in Los Angeles. He studied at Harvard College, graduating in 1966, and then began graduate work in political science at Harvard. He taught at Harvard and the University of Pennsylvania, worked on political campaigns and consulting projects in New York, and for a time considered a career in public policy.
He never completed his doctorate. Instead, an interest in economics and inflation in the 1970s drew him to markets. He read widely about economic theory and began speculating in futures, an unusual move for someone with his academic background. His success at Commodities Corporation in the late 1970s and early 1980s gave him the confidence and capital to start Caxton.
His path into finance is often cited as an example of how the hedge fund industry of the 1970s and 1980s drew people from outside Wall Street. Commodities Corporation in particular recruited economists and academics, gave them capital to trade and kept those who managed risk well, and several of its alumni went on to found major firms of their own.
Philanthropy and public life
Kovner is a major donor to the arts and education. He has served as chairman of the Juilliard School, and in 2006 he donated a large collection of rare music manuscripts, including autograph scores by leading classical composers, to the school. He has also supported Lincoln Center, the Metropolitan Opera and the Kovner Fellowship program at Juilliard, which funds students in music, dance and drama.
In public policy he has been associated with free market and education reform causes. He served as chairman of the American Enterprise Institute, a Washington think tank, and has funded charter schools and school choice initiatives in New York. He has also been a significant donor to Republican candidates and causes. He generally avoids publicity and gives few interviews.