Ken Griffin, Dan O’Keefe, Chris James: Invest For Kids 2018 Full Notes in Depth Part I

Full notes of Ken Griffin, Dan O’Keefe, Chris James’ presentation from the 2018 Invest For Kids conference. Stay tuned for more from Invest For Kids in depth 10th Anniversary Conference which took place on October 24, 2018 in Chicago. All content will be posted at this link and in our Q3 letters archive so stay tuned.

You can see our brief summaries of all speakers we covered below

• Ken Griffin
• Dan O’Keefe: Long Dental Company
• Vivian Azer Top Ranked Sell Side Analyst Invest For Kids 2018 – LONG WEED Pitch
• Chris James Partner Fund Management CIO- Long Taxes Pitch
• Phil Ordway of Anabatic Investment Partners
• Constance Freedman of Moderne Ventures
• John Rogers of Ariel Investments
• Mark Lampert Founder of BVF Partners- Long Mid-cap Biotech
• Vivian Lau – Long Pitch

[00:00:00-00:00:22 miscellaneous]

Ken Griffin

[00:00:22] Dan: First I want to just start out and congratulate Ron for doing such an incredible job with Invest for Kids these last 10 years. When Ron and I talked about this I said it’s a phenomenal idea and you should do it, you’re going to be a great success and thanks to all of you here today and everybody who has supported over the last 10 years Invest for Kids has been a great success. It’s made a difference here in Chicago and will continue so you should give Ron a round of applause.

It is an honor for me to be here today with Ken. Ken and I have a relationship that goes back to 1990-1991, he famously started Citadel in a dorm room with one employee with him and today there’s 1800-1900 employees, 900 on the investment side. He was initially practicing one strategy and today the entire gamut of investment strategies with $32 billion of funds. Interestingly to me the balance sheet at times has been over $200 billion and as a market maker maker 39% of the listed options on any given day and 20% of the US equities on a given day, so a tremendous impact and input on the markets.

Ken has been one of the most successful managers measuring the way that we should all measure which is net return to investors and he’s generated 19% net returns since inception. $1 million invested with Ken in 1990 is $132 million today and I’m pleased to be an investor with him for a long time. Outside of Citadel Ken has been a committed philanthropist and an accomplished [inaudible 00:02:26]. Ron talked about numbers and what those numbers are like and his investments in education have ensured that kids can get the best education available regardless of their background and circumstances. His investments in the quality of life improved the lives of people who live here in Chicago and recently important investments in public safety that [inaudible 00:02:53]. So for me this a terrific thing with Ken and I consider him a friend.

I’m going to start off on investments and big picture management and we’ll hone in. There’s a ton of them today on trade, on policy, fiscal policy, [inaudible 00:03:23] here in a couple of weeks. What is encouraging to you, what’s concerning to you and how you manage your risk portfolio around over the last couple of years.

[00:03:40] Ron: First of all I have to say Dan and I have been friends almost 30 years throughout great times and some very difficult times. You always know what a person is like when you have to go through the difficult times and he’s navigated this together pretty damn well both on policies in our state finance and our shared commitment to how we make Chicago one of the world’s great cities to live in. It’s been a pleasure meeting here with you today, a day after the stock market fall and we’re really wishing for a little bit more tranquility and a better sleep at night.

So big picture there is a fair amount to be worried about today in the day to day. The trade war with China does not have an obvious ending in sight because some of the objectives that we are trying to see are very hard to negotiate and document. I do believe that in the mid term it’s likely to be a much better position to have those conversations with China once the political dust in America settles.

The midterms themselves the last time I had the opportunity to deal with Michael Bloomberg who is one of the largest contributors to the Republican party, members of the administration there, no one knows what’s going to happen in the midterms, no one knows. I learned that everyone is playing the cards on a table near [inaudible 00:05:26] we are pulling data has probably been the least valuable it’s ever been and what will drive turnout is completely unknown.

In all likelihood the Republicans keep the senate, the house is actually pretty close to a coin toss. It’s not going to be a likely windfall for the democrats but the choice is that the democrats take the house pretty close to an equally divided house. That’s going to create an interesting environment for the next two years and the house views if the democrats control the house they can play ball with this president and give him immigration reform and get infrastructure done which will be two big wins for America.