Making Music and Money

Just off Alexander Road, escaping most notice, is a prosperous commodities hedge fund, Caxton, founded in 1983. I thought of it when reading “Is Music the Key to Success” in the arts section of the New York Times, yet another tribute to how music lessons seem to promote intelligence. Caxton’s co-founder, Bruce Kovner, was quoted on the importance of music to developing mental acuity.

I’ve never interviewed Kovner, though I have followed the progress of Caxton with eagerness and amazement. Such hedge funds are like a forbidden mystery to me. How do they make so much money so quickly?

His name came up in the pages of U.S. 1 on March 8, 2006, when he donated his valuable music manuscript collection to Juilliard. It was a paparazzi-like opportunity to summarize his biography, excerpted from a book. He had been hired by Helmut Weymar to be a trader at Commodities Corporation but had moved to Manhattan after founding the firm. But U.S. 1 Newspaper doesn’t care where you live, only where the business is located.

The link to the U.S. 1 article is here but, since the story is way down on the page, here is the gist of the Kovner part.

excerpt from U.S. 1:

. . .As a collector of rare books and manuscripts, Kovner named his company after the English printer. It grew from incubator space at Commodities Corp. on Mount Lucas Road to its own quarters on Morgan Lane and Enterprise Drive before moving to Alexander Road.

As told by Jack Schwager in his “Market Wizards” book, Kovner was a harpsichord-playing taxi driver when he began trading commodities in 1977 by borrowing $3,000 on his credit card. He did have a blue collar background, but he also graduated cum laude from Harvard (Class of 1966), pursued a PhD at Harvard, managed political campaigns (thinking he might eventually be a candidate himself), hobnobbed with such celebrities as Henry Kissinger and Pat Moynihan, and served as consultant for various government agencies.

Kovner joined Commodities Corp. in 1977 and settled in Princeton with his wife, Sarah, a craftsperson who made violas; they have three children. He left in 1983 with $7.6 million to found his own company. According to the New York Times the family is living in New York on Fifth Avenue at 94th Street. Forbes magazine says Kovner is worth $2.5 billion, and with $10.8 billion under management last year, Caxton is the seventh largest hedge fund company.

Within three years the manuscripts will have their own climate-controlled room at Juilliard, which hopes to make some of them available on the Internet. Kovner is chairman of the board at Juilliard.

Note that these figures are from 2006. Kovner has relinquished the CEO’s job. I am still waiting for my excuse to interview Kovner.

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