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Citadel's billionaire founder Ken Griffin is no fan of former president Donald Trump, but he's putting his sizable personal wealth to work to elect Republicans across the country.
Once a backer of Florida Gov. Ron DeSantis' failed presidential campaign, Griffin has emerged as the second-biggest individual donor in this election cycle, donating more than $75 million to different conservative super PACs and candidates. Only railroad empire heir Timothy Mellon has given more so far.
Hedge fund managers and private equity executives have become the go-to sources for donations for both parties. George Soros, Lone Pine founder Stephen Mandel, and the late Jim Simons have been longtime mega-donors to Democrats and liberal organizations, while Griffin, Elliott's Paul Singer, and Blackstone cofounder Steve Schwarzman have funded Republican campaigns and causes.
Occasionally, the alternative investment industry's political involvement can be nakedly self-serving. Crypto investors and firms have been huge donors to both sides of the aisle to gain a foothold in Washington for their interests, for example.
But for the industry's biggest names who have become involved in politics, personal interests and values drive their giving. For example, Singer, whose son Andrew married his husband in 2009, donated to causes supporting the legalization of gay marriage in different states despite backing GOP politicians who were against it.
It's a natural progression for an industry that has minted dozens of billionaires, but in conversations with four investors, there are concerns that hobbies can take them away from their day-to-day roles. The investors spoke broadly, without naming specific firms or leaders.
Politics or "just being active on Twitter" is "a sign they're not spending 100% of their time and effort on the investment side," said Rudy Koitchev, managing director of alternative investments at SEI, which runs a roughly $4 billion portfolio of hedge funds and liquid alts.
"It's a distraction," he said.
Mercer's global chief investment strategist, Rich Nuzum, advises institutional investors with more than $16 trillion to invest. For him, "it's a people business, so the soft stuff is the main focus in every conversation."
"Honestly, we don't love it when we see senior investment professionals developing strong interests away from their investment process — publishing books, you know, getting into politics," he said.
Brian Payne, chief strategist covering private markets and alternatives at BCA Research, said that similar to purchasing a sports team, the question for LPs is about the time commitment.
"What kind of time are they spending away from the office to do that?" Payne asked.
While Chris Walvoord — a former executive at Aon who used to lead a team investing in hedge funds — doesn't fault anyone for donating money to something they believe in, it's when founders become more public about their politics that concerns him.
"You're probably alienating some potential investors," he said, and that puts all investors at risk if it impacts a manager's business health.
"If you're super into racing sailboats, that's a distraction. Politics comes with a business risk."
Nuzum said that in some firms, succession plans and the promotion of the next generation help ease these concerns.
When the next star investor is identified to LPs and given more responsibility, "then it's more OK that the senior people are mentoring and not doing as much anymore, that they're developing other interests," he said.
"So I don't want to say it's always bad, but it is a people business, and you want the people who are in the business to be focused on it," he said.
The reality for most of the industry's biggest donors is they're no longer at the height of their careers.
Many of them have either returned outside capital or stepped back from their leading roles. Soros and big-time Republican donor David Tepper, the Carolina Panthers owner who runs Appaloosa Management, are mostly managing their own money these days. Mandel retired from Lone Pine, turning the firm over to some of his top lieutenants.
In this context, Griffin stands out even more. The founder of both $63 billion hedge fund Citadel and massive market-maker Citadel Securities, 55-year-old Griffin has never been more powerful in his industries or in GOP circles.
While LPs prefer their managers stay out of the headlines, Griffin has not been shy in recent years about picking fights. Earlier this year, Griffin waded into the debate surrounding college campuses and pro-Palestinian protesters, saying he was withholding donations to his alma mater, Harvard, until the administration aligned with his thinking.
His firms left Chicago for Miami after tiffs with state and local leaders, and Griffin even compared the midwestern city's violence to Afghanistan (plenty of his employees still work and live in Chicago, and the city's Museum of Science and Industry was renamed after Griffin in May after he donated close to $60 million).
"Ken's political participation is driven by his commitment to America. He supports those who share his dedication to individual rights and freedoms, access to high-quality education, upward mobility, safe communities, and a strong national defense," said Zia Ahmed, a spokesperson for Griffin, who is advised on his political activities by a small team, including Citadel's head of public affairs Cason Carter.
While the billionaire has garnered more attention in recent elections for his level of giving, Griffin has been active in politics for a quarter of a century — proving he can be both a big donor and a top money manager. Fund-of-funds LCH Investments says the firm is the most profitable hedge fund of all time, and nearly every institutional investor in the world would jump at the chance to allocate.
And boards of these institutional investors can sometimes overestimate their power, said Payne, an investment officer at the Teachers' Retirement System of Illinois from 2017 to 2022
While they control the pursestrings of hundreds of billions of assets, top-tier hedge funds and private equity managers have the leverage — and "they know they can go raise money elsewhere."
Payne said this insulation protects the biggest names in the industry — as long as the performance continues.
But that doesn't mean LPs enjoy their managers talking.
"It's a very uncomfortable experience to see them in the media constantly," Koitchev said.
