The high profile divorce of billionaire Citadel hedge fund manager Ken Griffin from his wife Anne Dias Griffin has sparked much media interest due to the enormous amount of money in the marital estate. His net worth is estimated at $6.5 billion, while hers is set at $50 million. As a side issue of some importance, a recent University of Florida study released this month indicates that both the marriage and divorce of hedge fund managers tend to negatively impact the fund’s performance. The study was based on data collected from 1994 to 2012 which followed 786 hedge fund managers who experienced 857 marriages and 251 divorces.
Ken Griffin and his wife were married in 2003 and have three children, all under the age of ten. He filed for divorce in Illinois in July 2014. Dias Griffin created a stir in recent court filings in which she claimed nearly $1 million of expenses per month to raise the children. These expenses include $300,000 for a private jet, $160,000 for vacations, $60,000 for office space and staff, $6,800 for groceries, $7,200 for eating out, and $2,000 for stationery. Mr. Griffin claims the money is not for child support, but to sustain Ms. Griffin’s lifestyle. She countered that the costs represent actual expenses incurred on behalf of the children during their marriage together, and that Illinois law requires him to maintain the standard of living enjoyed by the children during the marriage. In addition, she avers that he has refused to pay monthly child support, an accusation that Griffin denies.
With all the hullabaloo surrounding his divorce, one would think that Mr. Griffin’s job performance would be negatively impacted. Not so, apparently. Citadel’s three hedge funds continue to outperform the market. Last year, Citadel Tactical Trading surged by 27%, Global Equities increased by over 23%, and Wellington climbed by 18%. In comparison, the average hedge fund gained only 2.2% in 2014, and the S&P 500 increased by 11%. This contradicts what one would expect according to the University of Florida study. The researchers found that a fund’s alpha, which is a measure of how much it beats the market, drops around the time of a hedge fund manager’s marriage, to the tune of an annualized 8.5%. Interestingly, the alpha only falls by 7.4% during a divorce. This latter fact surprised the study’s authors. However, the impact of marriage was felt more by older managers over the age of 49. The funds managed by this demographic group experienced a 14.3% decline, while those managed by younger individuals were hardly affected. The effect was reversed during divorce. Older managers only lost 4.1%, while younger managers’ alphas fell by 15.7% during a divorce.
So, the question naturally arises, how is it that Ken Griffin, who is only 46, seems to have fared so well? One factor, according to the study’s authors, is whether the manager has partners who can help in managing the fund during a crisis. Another factor is to what extent the fund’s success is actually due directly to the work of the hedge fund manager himself.
Divorce is an emotionally challenging experience for anyone. Competent legal advice can assist an individual in staying afloat financially, professionally, and emotionally during this trying time. If you are facing an impending divorce, James S. Cunha, Esq. is an experienced West Palm Beach Divorce Attorney who has assisted many individuals in navigating through the rough waters of a marital breakup. The Law Offices of James S. Cunha, P.A. serves divorce and family law clients in Palm Beach, Martin, Okeechobee, Broward, Hendry, St. Lucie, and Miami-Dade Counties. Call today for a consultation at 561-429-3924, or toll free at 1-800-558-1227.