Paul Tudor Jones
Encyclopedia
Paul Tudor Jones II is the founder of Tudor Investment Corporation, which is the management company for his various private investment partnerships, also referred to as hedge funds. As of March 2011, he was estimated to have a net worth of USD 3.3 billion by Forbes
Magazine and ranked as 336th richest in the world. His management company charges the hedge funds he manages a fee that is higher than the industry standards. The industry standards are two percent per annum of assets under management and twenty percent of the profits, whereas Tudor Investment Corp. charges four percent per annum of assets under management
and twenty-three percent of the profits.
. He attended Presbyterian Day School
there before attending Memphis University School
for high school and then University of Virginia
, earning an undergraduate degree
in economics
in 1976 as well as a welterweight
boxing
champion
ship.
In 1976, he started working on the trading floors as a clerk and then became a broker for E.F. Hutton. 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."
Jones' cousin William Dunavant Jr., whose Dunavant Enterprises is one of the world's largest cotton merchants, advised Jones to go down to New Orleans to talk with commodity broker
Eli Tullis, who hired and then mentored him in trading cotton futures at the New York Cotton Exchange
. Jones later said:
In 1980 Jones founded Tudor Investment Corporation, which is today a leading asset management firm headquartered in Greenwich, Connecticut
. The Tudor Group, which consists of Tudor Investment Corporation and its affiliates, is involved in active trading, investing and research in the global equity, venture capital
, debt, currency
, and commodity markets
.
One of Jones' earliest and major successes was predicting Black Monday
in 1987, tripling his money during the event due to large short positions. In the 1987, PBS film "TRADER: The Documentary".
The film shows Jones as a young man predicting the 1987 crash, using methods similar to market forecaster Robert Prechter
. Although the video was shown on public television in November 1987, very few copies exist. Those that do are hoarded by traders who watch the hourlong movie in the hope of gleaning possible trading tips from Jones. On the Internet
, bids for the video start at $295. According to Michael Glyn, the video's director, Jones requested in the 1990s that the documentary be removed from circulation. The video surfaced briefly on YouTube at the end of July 2009, before being taken down due to alleged copyright violations (http://www.youtube.com/watch?v=ELiKV9Kqo84).
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.
, Jones futures trading style and beliefs are summarized as follows :
, a philanthropic organization mainly backed 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.
He owns Grumeti Reserves in Tanzania
’s Western Serengeti
and was recently lauded by the East African country’s Parliament for not permitting hunting
in his reserve. 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 had 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
.
Paul Tudor Jones is a former chairman of the National Fish and Wildlife Foundation
and currently chairs the Everglades Foundation
.
In 1990, Jones pleaded guilty to illegally filling protected wetlands on his estate, and paid a $2 million settlement.
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
Magazine and ranked as 336th richest in the world. His management company charges the hedge funds he manages a fee that is higher than the industry standards. The industry standards are two percent per annum of assets under management and twenty percent of the profits, whereas Tudor Investment Corp. charges four percent per annum of assets under management
Assets under management
Assets under management is a financial term used denote the market value of funds being managed by a financial instutition on behalf of its clients, investors, depositors, etc. This metric is a sign of size and success against competition...
and twenty-three percent of the profits.
Business life
Jones was born in Memphis, TennesseeMemphis, Tennessee
Memphis is a city in the southwestern corner of the U.S. state of Tennessee, and the county seat of Shelby County. The city is located on the 4th Chickasaw Bluff, south of the confluence of the Wolf and Mississippi rivers....
. He attended Presbyterian Day School
Presbyterian Day School
Presbyterian Day School is a private school located at 4025 Poplar Avenue, Memphis, Tennessee, 38111. It is one of the largest elementary school for boys in the United States, enrolling 644 students in grades pre-kindergarten through the sixth grade....
there before attending Memphis University School
Memphis University School
Memphis University School is an all-male private school for grades 7–12, located in Memphis, Tennessee.-History:MUS was founded in 1893 by Edwin Sidney Werts and James White Sheffey Rhea. MUS is a college-preparatory school. The school's colors, red and blue, were chosen by the founders to...
for high school and then University of Virginia
University of Virginia
The University of Virginia is a public research university located in Charlottesville, Virginia, United States, founded by Thomas Jefferson...
, earning an undergraduate degree
Undergraduate degree
An undergraduate degree is a colloquial term for an academic degree taken by a person who has completed undergraduate courses. It is usually offered at an institution of higher education, such as a university...
in economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
in 1976 as well as a welterweight
Welterweight
Welterweight is a weight class division in combat sports. Originally the term "welterweight" was used only in boxing, but other combat sports like kickboxing, taekwondo and mixed martial arts also began to use it for their own weight division system...
boxing
Boxing
Boxing, also called pugilism, is a combat sport in which two people fight each other using their fists. Boxing is supervised by a referee over a series of between one to three minute intervals called rounds...
champion
Champion
A champion is the victor in a challenge, contest or competition.There can be a territorial pyramid of championships, e.g. local, regional / provincial, state, national, continental and world championships, and even further divisions at one or more of these levels, as in soccer. Their champions...
ship.
In 1976, he started working on the trading floors as a clerk and then became a broker for E.F. Hutton. 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
Harvard Business School
Harvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
, 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."
Jones' cousin William Dunavant Jr., whose Dunavant Enterprises is one of the world's largest cotton merchants, advised Jones to go down to New Orleans to talk with commodity broker
Commodity broker
A commodity broker is a firm or individual who executes orders to buy or sell commodity contracts on behalf of clients and charges them a commission. A firm or individual who trades for his own account is called a trader. Commodity contracts include futures, options, and similar financial...
Eli Tullis, who hired and then mentored him in trading cotton futures at the New York Cotton Exchange
New York Cotton Exchange
The New York Cotton Exchange was a commodities exchange founded in 1870 by a group of one hundred cotton brokers and merchants at 1 Hanover Square in New York City.- History :...
. Jones later said:
"He [Eli Tullis] 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, which is today a leading asset management firm headquartered in Greenwich, Connecticut
Greenwich, Connecticut
Greenwich is a town in Fairfield County, Connecticut, United States. As of the 2010 census, the town had a total population of 61,171. It is home to many hedge funds and other financial service companies. Greenwich is the southernmost and westernmost municipality in Connecticut and is 38+ minutes ...
. The Tudor Group, which consists of Tudor Investment Corporation and its affiliates, is involved in active trading, investing and research in the global equity, venture capital
Venture capital
Venture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
, debt, currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
, and commodity markets
Commodity markets
Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts....
.
One of Jones' earliest and major successes was predicting Black Monday
Black Monday (1987)
In finance, Black Monday refers to Monday October 19, 1987, when stock markets around the world crashed, shedding a huge value in a very short time. The crash began in Hong Kong and spread west to Europe, hitting the United States after other markets had already declined by a significant margin...
in 1987, tripling his money during the event due to large short positions. In the 1987, PBS film "TRADER: The Documentary".
The film shows Jones as a young man predicting the 1987 crash, using methods similar to market forecaster Robert Prechter
Robert Prechter
Robert R. Prechter, Jr. is an American author and stock market analyst, known for his financial forecasts using the Elliott wave principle. Prechter is an author and co-author of 14 books, and editor of 2 books , his book Conquer the Crash is a New York Times bestseller...
. Although the video was shown on public television in November 1987, very few copies exist. Those that do are hoarded by traders who watch the hourlong movie in the hope of gleaning possible trading tips from Jones. On the Internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
, bids for the video start at $295. According to Michael Glyn, the video's director, Jones requested in the 1990s that the documentary be removed from circulation. The video surfaced briefly on YouTube at the end of July 2009, before being taken down due to alleged copyright violations (http://www.youtube.com/watch?v=ELiKV9Kqo84).
Jones' firm currently manages
Assets under management
Assets under management is a financial term used denote the market value of funds being managed by a financial instutition on behalf of its clients, investors, depositors, etc. This metric is a sign of size and success against competition...
$17.7 billion (as of June 1, 2007). Their investment capabilities are broad and diverse, including global macro
Global macro
Global Macro is defined as the strategy of investing, on a large scale, around the world using economic theory to justify the decision making process...
trading, fundamental equity investing in the U.S. and Europe, emerging markets
Emerging markets
Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. Based on data from 2006, there are around 28 emerging markets in the world . The economies of China and India are considered to be the largest...
, venture capital, commodities, event-driven strategies, and technical trading systems. Jones, with his colleague Hunt Taylor, was instrumental in the creation of FINEX
FINEX
In finance, the term "Finex" is an acronym for "financial exchange."In the technology world, the term FINEX is the name for an innovative iron making technology developed by Siemens VAI and POSCO...
, 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
New York Cotton Exchange
The New York Cotton Exchange was a commodities exchange founded in 1870 by a group of one hundred cotton brokers and merchants at 1 Hanover Square in New York City.- History :...
from August 1992 through June 1995.
Trading style and beliefs
As reported in Market WizardsMarket Wizards
Market Wizards is a book written by Jack D. Schwager and published in 1988 in which he interviews a wide range of traders with excellent track records of profitability.The book contains four parts covering interviews with traders in a wide range of markets...
, Jones futures trading style and beliefs are summarized as follows :
- ContrarianContrarian investingIn finance, a contrarian is one who attempts to profit by investing in a manner that differs from the conventional wisdom, when the consensus opinion appears to be wrong....
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 if a losing position 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 realtime.
- He believes prices move first and fundamentals come second.
- He doesn’t care about mistakes made 3 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.
Philanthropy
Jones is the founder of the Robin Hood FoundationRobin Hood Foundation
The Robin Hood Foundation is a charitable organization, which attempts to alleviate problems caused by poverty in New York, United States.-History:Founded in 1988, Robin Hood was the brainchild of hedge fund manager Paul Tudor Jones...
, a philanthropic organization mainly backed by hedge fund operators. He founded and was the Chairman of the Board
Chairman of the Board
The Chairman of the Board is a seat of office in an organization, especially of corporations.Chairman of the Board may also refer to:*Chairman of the Board , a 1998 film*Chairmen of the Board , a 1970s American soul music group...
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.
He owns Grumeti Reserves in Tanzania
Tanzania
The United Republic of Tanzania is a country in East Africa bordered by Kenya and Uganda to the north, Rwanda, Burundi, and the Democratic Republic of the Congo to the west, and Zambia, Malawi, and Mozambique to the south. The country's eastern borders lie on the Indian Ocean.Tanzania is a state...
’s Western Serengeti
Serengeti
The Serengeti ecosystem is a geographical region in Africa. It is located in north Tanzania and extends to south-western Kenya between latitudes 1 and 3 S and longitudes 34 and 36 E. It spans some ....
and was recently lauded by the East African country’s Parliament for not permitting hunting
Hunting
Hunting is the practice of pursuing any living thing, usually wildlife, for food, recreation, or trade. In present-day use, the term refers to lawful hunting, as distinguished from poaching, which is the killing, trapping or capture of the hunted species contrary to applicable law...
in his reserve. 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 had made large donations to his alma mater
Alma mater
Alma mater , pronounced ), was used in ancient Rome as a title for various mother goddesses, especially Ceres or Cybele, and in Christianity for the Virgin Mary.-General term:...
, the University of Virginia
University of Virginia
The University of Virginia is a public research university located in Charlottesville, Virginia, United States, founded by Thomas Jefferson...
, 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
University of Virginia
The University of Virginia is a public research university located in Charlottesville, Virginia, United States, founded by Thomas Jefferson...
.
Paul Tudor Jones is a former chairman of the National Fish and Wildlife Foundation
National Fish and Wildlife Foundation
The National Fish and Wildlife Foundation protects, sustains and restores the wildlife, plants and habitats of the United States. Established by Congress in 1984, the Foundation directs public conservation dollars to critical environmental needs and matches those investments with private...
and currently chairs the Everglades Foundation
Everglades Foundation
-History:The Everglades Foundation was formed by a group of outdoor enthusiasts, environmentalists and residents of Florida who were concerned over the decline of the Everglades and the resulting damage in the nearby natural and protected areas such as Florida Bay...
.
Personal life
Jones has been married to his wife Sonia, an Australian former fashion model, since 1988. They have four children.In 1990, Jones pleaded guilty to illegally filling protected wetlands on his estate, and paid a $2 million settlement.
External links
- Curated Interview With Paul Tudor Jones From Market Wizards
- Key Quotes From Paul Tudor Jones in TRADER: The Documentary
- Absolute Return + Alpha, June 2008 interview
- "Adapt or Die," Hedge Fund Review, July 2004
- "Failure Speech", June 2009
- "Price Limits: A Return to Patience and Rationality in U.S. Markets", October 2010
- "Paul Tudor Jones speech during painting unveiling ceremony at UVA's John Paul Jones Arena", January 7, 2011