Bruce Stanley Kovner: The Hedge Fund Legend

Bruce Stanley Kovner: The Hedge Fund Legend

Bruce Kovner was born in 1945 in New York to a Russian Family who immigrated to New York in the early 1900s. In 1953, his father moved the family to San Fernando Valley where he became the student-body president of Van Nuys High School at 16, and an accomplished basketball player.

Kovner went to Harvard College starting in 1962 and in in 1965, sadness dominated his life after the hanging suicide of his mother. He studied political economy at the John F. Kennedy School of Government but he didn’t finish his PH.D after failing to choose a subject matter. In the next few years, he worked on political campaigns, studied harpsichord while being a cab driver. In 1973, at age 28, he married artist Sarah Peter and they divorced in 1998.

Since his first commodities trade in 1977 using $3000.00 borrowed from his MasterCard to buy copper and interest rate futures, Kovner has proven himself as one of the greatest traders of all time.

From this initial foray into the commodities markets, Kovner also learned another crucial lesson: risk management.   For his first two trades in copper and interest rate futures, Kovner booked $1000.00 in profits.  This $4000.00 ($3000.00 initial stake plus $1000.00 profit) soon rose to $45,000.00 in only six weeks when a soybean shortage developed.

When the market turned and reverted, as it always does, Kovner panicked and ignored trading stops along the way down. From there, his position fell back to $23,000.00.  He lost half in profits within one hour.

A nice profit of $22,000.00, indeed, from an initial position of only $3000.00 was still a good result.   However, a much better lesson in risk management was the ultimate result, observes Kovner.  “I closed out the trade and was physically sick for a week,” he remembers.   ”In retrospect, that was a very good thing.   It helped me understand risk and create structures to control risk.”

Even though he was ill after the lost profits, like all the great ones Kovner was able to forget about the negative aspects of the trade and focus on the lessons learned to improve his future performance.

After that trade, there have not been too many lessons that Kovner has not mastered in investing for profit. He is the founder and chairman of Caxton Associates, LLC, which was closed to new investors since 1992, is one of the ten largest hedge fund families in the world, with more than $15 billion under management.

In 2007, he married Susie Fairchild, the daughter of Robert Fairchild. In March 2012, Bruce Kovner was ranked as number 232 on the list of the world’s wealthiest people.

“After 34 years in the trading business and more than 28 years leading Caxton, the time has come to hand the leadership of the company to a new generation,”

“I do so knowing that I will miss the adrenalin rush of confronting markets every day but also confident that new leadership will carry on the traditions, style and substance of Caxton’s successful history.” In 2011, Kovner wrote in a letter to investors.

In March 2013, he was ranked as the 95th richest American and the 299th richest in the world with a net worth of $4.3B according to Forbes magazine.

Amir El Araby

Co-Founder & Chief Global Strategist at FxComment.com, with 17 years’ experience in the technical analysis studies for FOREX, Commodities and Indices. Amir El-Araby worked as a mentor for many companies and institutes, where he presented new methods for trading in the financial market. Amir is a member of ESTA (Egyptian Society of Technical Analysts). Amir is also the official partner of Harmonic Trader (Mr Scott Carney) and the official instructor of harmonic trader association for Arab countries.

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