Paul Tudor Jones

Paul Tudor Jones
	Jones in 2006
Born	September 28, 1954 (age 72); Memphis, Tennessee, United States
Nationality	American
Education	University of Virginia (BA, economics, 1976)
Occupation	Hedge fund manager, conservationist, philanthropist
Company	Tudor Investment Corporation
Title	Founder and chief investment officer, Tudor Investment Corporation; Co-founder, Robin Hood Foundation
Net worth	US$8.1 billion (2024)
Spouse	Sonia Klein (m. 1988)
Children	4, including Caroline Jones

Paul Tudor Jones II (born 28 September 1954) is an American hedge fund manager, conservationist and philanthropist. He founded Tudor Investment Corporation in 1980 and co-founded the Robin Hood Foundation, a poverty relief organisation, in 1988.

Jones is one of the founding figures of global macro investing, the discipline of trading currencies, interest rates, commodities and equity indices on views about the direction of whole economies. He became widely known for predicting and profiting from the stock market crash of October 1987, when his fund returned 125.9 per cent after fees. He has since become as well known for the Robin Hood Foundation and for conservation work in Florida and Tanzania as for trading. As of July 2024 his net worth was estimated at 8.1 billion dollars.

Early life and education

Jones was born in Memphis, Tennessee. His father, John Paul Jones, known as Jack, practised transportation law from an office next door to The Daily News, a Memphis publication his family has owned and operated since 1886 and of which Jack Jones was publisher for 34 years. His half-brother is Peter Schutt.

He attended Presbyterian Day School, an all-boys elementary school, and then Memphis University School. He went on to the University of Virginia, where he was a welterweight boxing champion and president of the Sigma Alpha Epsilon fraternity. To help pay his tuition he wrote for the family newspaper under the pseudonym Paul Eagle. He graduated with a bachelor's degree in economics in 1976. He was later accepted by Harvard Business School but did not attend.

Early career

New York Cotton Exchange

After graduating in 1976, Jones asked his cousin William Dunavant Jr., chief executive of Dunavant Enterprises and one of the largest cotton merchants in the world, for an introduction to trading. Dunavant sent him to the commodity broker Eli Tullis in New Orleans, who represented some of the largest cotton traders anywhere. Tullis hired Jones and taught him to trade cotton futures on the New York Cotton Exchange, then fired him after he fell asleep at his desk following a night out.

The relationship with the exchange proved durable despite the dismissal. Jones served as its treasurer in 1986 and as chairman from August 1992 to June 1995.

E. F. Hutton

At twenty-four Jones became a commodities broker at E. F. Hutton and Company, where he worked alongside Glenn Dubin, who remained a lifelong friend and business associate.

Tudor Investment Corporation

Founding

Jones founded Tudor Investment Corporation in 1980, based in Stamford, Connecticut. He was then an unknown trader, and Dunavant and Tullis were among his first clients. In one of its earliest external allocations, Commodities Corporation gave Tudor 30,000 dollars to manage.

Jones extended the techniques he had learned in cotton into other commodities and then into financial instruments, particularly stock index contracts and currency futures. The firm today manages approximately 12 billion dollars across a wide range of strategies including discretionary global macro, quantitative global macro, discretionary equity long and short, quantitative equity market neutral, growth equity, emerging markets, venture capital and event-driven investing.

Tudor has charged fees above the industry norm for most of its history. Against a standard of two per cent of assets under management and twenty per cent of profits, the firm has charged four per cent and twenty-three per cent, a premium sustained by the strength of its long-term record.

Black Monday

The trade that made Jones's public reputation was his positioning ahead of the crash of 19 October 1987. Peter Borish, his second in command, had mapped the 1987 market against the market preceding the 1929 crash and found a close correspondence. Jones built large short positions on the strength of that analysis.

The fund returned 125.9 per cent after fees in 1987, earning an estimated 100 million dollars, and roughly tripled Jones's own money during the crash itself. A front-page article in The Wall Street Journal in 1988 called him the most watched and most talked about man on Wall Street.

Later trading

In 1990, as the Japanese equity bubble deflated, Jones returned 87.4 per cent by shorting the market, repeating on a different continent the pattern that had worked three years earlier. He closed the Tudor Select Fund, a futures vehicle, and returned investor capital in 1991.

With his colleague Hunt Taylor, Jones was instrumental in creating FINEX, the financial futures division of the New York Board of Trade, and in developing its United States dollar index futures contract. His chairmanship of the exchange gave Tudor greater liquidity and flexibility in its own trading.

In 2014 The New York Times observed that returns for Tudor clients had dimmed over the preceding decade, attributing this to a deliberate decision by Jones to trade more conservatively, to the absence of large interest rate and currency movements while central banks held short-term rates near zero, and to increased competition as the hedge fund industry expanded.

Investment philosophy

Jones trades global macro principally through technical analysis rather than value investing, with heavy emphasis on momentum and on the price action that reveals where positioning has become crowded. His most frequently quoted principle concerns risk rather than return: the defining discipline is limiting losses on positions that move against him rather than maximising gains on those that work.

In a 2000 interview he said he regretted not having participated more in venture investing in technology companies during the 1990s. In 2020 he disclosed that he held bitcoin as a hedge against inflation, a statement that received wide attention given his standing among traditional macro investors.

Castleton Commodities International

In October 2012 Jones joined Glenn Dubin and Timothy Barakett in a group of investors buying the merchant energy business Louis Dreyfus Highbridge Energy from Louis Dreyfus Company and Highbridge Capital Management. The company was renamed Castleton Commodities International.

Conservation

In 1993 Jones co-founded the Everglades Foundation, which advocates for the conservation of the Everglades wetlands in Florida. He chairs its board, which has included Jimmy Buffett, Jack Nicklaus, David Lawrence Jr., Jon L. Mills and William Wrigley Jr. II.

In 2002 the Tanzanian government leased Jones the Grumeti reserve in the western Serengeti. The holding comprises three contiguous hunting blocks: Grumeti Game Reserve, Fort Ikoma Open Area and Ikorongo Game Reserve. Such blocks are intended to generate revenue for the central government and local districts through hunting licences and trophy fees, and would make no fiscal sense to the state if that income disappeared. Jones resolved this by paying the hunting fees himself while almost entirely eliminating hunting on the land, converting it in practice into a conservation area financed as though it were a hunting concession.

The National Audubon Society awarded him the Audubon Medal in 2016, recognising his work combining conservation with economic sustainability and habitat protection.

Philanthropy

Robin Hood Foundation

Jones founded the Robin Hood Foundation in 1988, together with Peter Borish and Glenn Dubin. Backed principally by hedge fund managers, it funds organisations working against poverty in New York City, operating on a model in which the founding board covers all administrative costs so that every donated dollar reaches programmes. It became the template for a generation of finance-funded philanthropy in the United States.

Education

In 1986, after watching a 60 Minutes segment about the philanthropist Eugene Lang, Jones adopted a sixth-grade class at an underperforming public school in Bedford-Stuyvesant, Brooklyn, guaranteeing college scholarships to every student who finished high school. He expected the incentive to lift the graduation rate to 90 per cent. In the event only 33 per cent of the class graduated.

Jones has spoken publicly and at length about the failure, saying that he had vastly underestimated the academic and social obstacles facing the students and that his programme had been completely ill-equipped to address them efficiently. In a 2009 commencement address at the Buckley School he described the episode as the foundation of everything he learned about education philanthropy afterwards.

In 2004 he founded the Excellence Charter School in Bedford-Stuyvesant, the first all-boys charter school in the United States, which became one of the better-regarded charter schools in New York. He also founded and chaired the Bedford Stuyvesant I Have A Dream Foundation.

University of Virginia

Jones has given substantially to his alma mater, including 44 million dollars toward the construction of a basketball arena named the John Paul Jones Arena after his father, who also attended the university. In April 2012 the university announced a Contemplative Sciences Center funded by a 12 million dollar gift from Jones and his wife Sonia.

Just Capital

Jones founded the non-profit Just Capital to measure and publicise the conduct of American companies against the priorities that the American public identifies as important, using an annual multi-phase survey. The organisation also operates an exchange traded fund composed of companies that score well on its measures.

Giving Pledge

In 2019 Jones and his wife joined the Giving Pledge, committing to give away most of their wealth. In their statement they noted that both had been raised in the Church and cited several biblical passages in support of the decision.

Politics

A political independent, Jones has donated to candidates of both American parties. He hosted a 500-person fundraiser at his Greenwich home for Barack Obama during the 2008 presidential election, and also donated to the campaigns of John McCain and Rudy Giuliani. He gave 200,000 dollars to Mitt Romney in 2012 and 50,000 dollars to Kathy Hochul in 2023.

He served as a director of the Futures Industry Association and helped create its educational arm, the Futures Industry Institute, later renamed the Institute for Financial Markets. He advocated for the design and implementation of the first ethics training course to become standard for exchange membership across United States futures exchanges.

Controversies

Wetlands destruction

In 1990 Jones pleaded guilty to illegally destroying 86 acres of protected wetlands on his hunting estate on Maryland's Eastern Shore, having filled them with 1,400 cubic yards of gravel without a permit. He was ordered to pay a one million dollar fine and one million dollars in restitution to the National Fish and Wildlife Foundation. The guilty plea avoided a possible one-year prison term for violating the federal Clean Water Act. The case is frequently cited alongside his later conservation work, which he began in earnest three years afterwards.

Remarks about women traders

In 2013 The Washington Post published video of Jones at a closed-door investment roundtable held at the University of Virginia in April of that year, responding to a question about the absence of women on the panel. He said that having a baby damages a woman's ability to focus on macro trading. The phrase that drew the most attention was his remark that as soon as a baby's lips touched a woman's bosom, that was the end of it.

The comments were widely criticised by other traders, journalists and industry organisations. Jones apologised, and in a written statement to the newspaper said his remarks concerned global macro traders specifically, a group of perhaps a few thousand successful practitioners worldwide who are on call at all hours, and that life events including birth, divorce and bereavement are obstacles to success in that particular field. The clarification did not end the criticism, which centred on his having framed a structural problem in the industry as a biological one.

University of Virginia governance

In June 2012 Jones was reported to have been a significant figure in the attempted removal of the University of Virginia president Teresa A. Sullivan. He wrote an editorial supporting her resignation, citing the institution's academic rankings and low staff salaries. The episode produced sustained protest from faculty and students, and on 26 June 2012 the Board of Visitors voted unanimously to reinstate Sullivan.

Association with Harvey Weinstein

Jones was a friend of the film producer Harvey Weinstein and a member of the board of The Weinstein Company. In 2017, as allegations of sexual misconduct against Weinstein mounted, Jones wrote to him predicting that the scrutiny would pass and offering advice on rebuilding his reputation. Weinstein was convicted in 2020 and sentenced to 23 years. Jones distanced himself in a written statement, saying that Weinstein was a friend he had believed too long and defended too long.

Jeffrey Epstein

In the year before Jeffrey Epstein's death, Jones's hedge fund paid Epstein 13.5 million dollars, a transaction that drew attention in subsequent reporting on Epstein's financial relationships with major investors.

Trader documentary

In 1987 PBS produced a documentary titled Trader about Jones, showing him as a young man forecasting the crash using methods resembling those of the market analyst Robert Prechter. It was broadcast in November 1987. During the 1990s Jones requested that the film be withdrawn from circulation, and copies appearing on video sharing sites have generally been removed following copyright claims. The film portrays him favourably, and the usual explanation offered for his objection is that it discloses elements of his trading method.

Recognition

Jones was inducted into the Hedge Fund Manager Hall of Fame of Alpha magazine in 2008, alongside Alfred Winslow Jones, Bruce Kovner, David Swensen, George Soros, Jack Nash, James Simons, Julian Robertson, Kenneth Griffin, Leon Levy, Louis Bacon, Michael Steinhardt, Seth Klarman and Steven A. Cohen.

In 2019 Reuters described him as one of the giants of the industry and reported that he is considered a legend among macro traders. The same year he received the Golden Plate Award of the American Academy of Achievement, presented by Francis Collins, director of the National Institutes of Health.

Personal life

By the mid-1980s Institutional Investor reported that Jones was developing a reputation for courting models and staying out late, and The Wall Street Journal profiled his lifestyle in a front-page article that referred to him as Quotron Man, published as a general reaction against Wall Street excess was taking hold in 1987.

In 1988 he married Sonia Klein, an Australian-born yoga entrepreneur based in New York, at a wedding in Memphis. They moved to Greenwich, Connecticut in the early 1990s and have three daughters and a son. His eldest daughter, Caroline, is a country and pop musician and has been a member of the Zac Brown Band since 2022. Jones has encouraged all three daughters to consider careers in macro trading. He resides in Palm Beach, Florida.

References

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