Bruce Kovner is best known as the founder and former chairman of Caxton Associates, a macro hedge fund he managed from 1983 to 2011. As of 2016, Kovner continues in his role as chairman of CAM Capital, a private investment company he established to manage his own assets and those of other senior employees of the firm. Kovner is a self-made billionaire and a philanthropist with a special interest in the performing arts.
Early Life and Education
Kovner was born in 1945 to a Jewish family in Brooklyn, New York. His grandparents had fled to America, penniless, from persecution and violence in their home countries of Poland and Russia. With some struggle, the family worked its way into the American middle class, and Kovner's childhood was comfortable. As Kovner describes it, his family imparted a belief in him that anything was possible in America with proper education and hard work.
In 1953, Kovner moved with his family to California, where his father worked as a mechanical engineer. Kovner excelled as a high school student and athlete, and won the student-body presidency at age 16. After high school, in 1962, he returned east to study at Harvard University on an academic scholarship. Upon graduation, Kovner embarked on a long period during which he struggled to find a path forward. He began a doctoral program at Harvard's John F. Kennedy School of Government, but he left before finishing his thesis. He studied piano and harpsichord at the Juilliard School in New York City and worked on political campaigns, neither to significant effect.
In 1973, Kovner got married and began driving a taxi. During this period, he was introduced to the commodities market and developed a keen interest in its workings. Kovner studied the markets at night after work. He made his first commodities trade in 1977 with $3,000 from his MasterCard. His initial investments were successful, and his funds ballooned to more than $20,000. He never looked back.
Kovner began working as a commodities trader in the late 1970s under Michael Marcus at Commodities Corporation, which now operates as a Goldman Sachs subsidiary. Kovner hit the ground running and proved himself an insightful and disciplined trader who made a lot of money for investors. After six years at Commodities Corporation, he resigned and started his own hedge fund, Caxton Associates, in 1983. The fund quickly gained fame for its pioneering use of a global macro strategy for hedge fund investing, which attempted to profit from global macroeconomic trends by investing in a mix of foreign currencies, equities, bonds, options, futures and other related instruments.
In 28 years as chairman of Caxton Associates, Kovner led the hedge fund to gains in all but one year, 1994, when the fund declined 2.5%. Overall annual returns for the fund averaged 21% during Kovner's chairmanship, outpacing the 11% annual gain posted by the S&P 500 Index during the same period. Cumulative gains from the fund amounted to more than $12 billion for the period.
Net Worth & Current Influence
With an estimated net worth of $5.2 billion, Bruce Kovner placed 93rd on the 2015 Forbes 400 list of the wealthiest Americans. Although his retirement from Caxton Associates in 2011 has perhaps reduced his visibility and influence as an investor, he continues to wield considerable influence through his philanthropic activities. Among his publicly acknowledged donations, he has given $60 million to fund a scholarship program at the Juilliard School. He and his wife, Suzie, have also given millions to the Carnegie Hall Society, the Lincoln Center for the Performing Arts and the Metropolitan Museum of Art, among other arts organizations.
Kovner also funds scholarships and provides funds to support charter school programs in New York. As of 2016, Kovner serves on the board of trustees of the American Enterprise Institute, a policy organization dedicated to the expansion of personal liberty and free enterprise in the United States.
Most Influential Quotes
"You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money." Kovner describes the major lesson he learned working under his professional mentor Michael Marcus at Commodities Corporation. You must have the self-confidence to admit your mistakes, cut your losses and move forward.
"If you personalize losses, you can't trade." Kovner provides a related lesson, which is that a successful trader should never regard the market as a personal nemesis to be beaten. He believes that trading with emotion puts an investor on the road to ruin.