Tesla Reportedly Expects to Have Cash to Make Big Debt Payment — The Motley Fool

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Heading into electric-car company Tesla‘s (NASDAQ:TSLA) fourth-quarter update next week, investors will be watching the company’s cash balance. Not only has Tesla’s cash balance decreased from $3.4 billion at the end of the company’s fourth quarter of 2017 to $3 billion by the third quarter of 2018, but Tesla has a massive debt payment due in March of this year.

This debt combined with Tesla’s recent update saying it will take significant efforts and “some luck” to achieve “a tiny profit” in its first quarter show why the company’s cash is such a hot topic. But Fox Business News, citing company insiders, is reporting on Thursday that Tesla thinks it will have the cash required to make this payment without needing to raise any capital.

A red Tesla Model 3

Model 3. Image source: Tesla.

Making big debt payments

“What I’m hearing from inside Tesla is that … company officials believe that they do have enough cash to make that payment — that they don’t have to go out and do a capital raise if they don’t want to,” said Fox Business reporter Charlie Gasparino on Thursday. The payment Gasparino is referring to is a $920 million bond payment due on March 1.

While the senior unsecured notes could be converted to stock, shares would have to trade close to $360 to be eligible for a swap. With the stock closing the trading day on Thursday at $291.51, the stock would need to rise about 23% in order for bondholders to be able to convert the debt to shares. Suffice it to say, Tesla shareholders aren’t counting on a conversion.

Adding fuel to the fire, Tesla also had a $230 million debt payment due in November of last year, which management said in its third-quarter shareholder letter that it planned to repay in cash during the quarter. 

Importantly, Gasparino admitted that his sources could be wrong and said he’s not sure if the company has totally ruled out the idea of a capital raise.

Cash is crucial

Due to the capital-intensive nature of Tesla’s business, cash flow and cash on hand is especially important to the company now. The automaker is ramping up production of its highest-volume vehicle yet — the Model 3 — while expanding deliveries of the vehicle to Europe and Asia. In addition, Tesla is aiming to bring to market a lower-cost version of the Model 3, which will put pressure on the company’s profit margin later this year.

Tesla’s cash position saw a boost recently when the company swung to positive cash flow in its third quarter. This helped bump the company’s cash and cash equivalents $731 million higher compared to the second quarter of 2018. While the company said it expects to remain cash flow positive in Q4, it’s less certain what to expect from Q1. Tesla recently announced plans to lay off 7% of its workforce in an effort to cut costs, suggesting the company is facing a cash crunch.

Investors will get more insight into Tesla’s current cash level and its plans for debt payments when the company reports its fourth-quarter results on Wednesday, Jan. 30.



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Intel Searches (and Searches) for a New C.E.O.

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SAN FRANCISCO — Intel answered many questions from Wall Street Thursday, but not the one that has dogged the company for seven months: Who will become chief executive of the giant chip maker?

The lengthy search, begun after Brian Krzanich was forced out in June for a past affair with a subordinate, illustrates the difficulty of finding a leader with the diverse skills needed to run one of Silicon Valley’s most complex companies.

Intel, which hosted a conference call Thursday to discuss the financial results of its most recent quarter, said its directors were conducting the search with “a sense of urgency” but gave no timetable for a selection.

“I am convinced the board of directors will close on a new C.E.O. in the near future,” said Robert Swan, Intel’s chief financial officer, who is also serving as acting chief executive.

Intel, which has 107,000 employees, sells the vast majority of processors that power personal computers as well as larger machines that run the web. It turns silicon wafers into chips in some of the world’s most sophisticated factories — sites that cost $5 billion to $10 billion each — and employs an army of chemical engineers, physicists, system architects, chip designers and computer programmers.

The company, which turned 50 last year, has never drawn a top executive from outside its own ranks. Indeed, Intel was once known for signaling the promotion of an internal candidate to its top job years in advance.

That tradition broke down with Paul Otellini’s surprise decision to resign in November 2012. Intel’s board considered external candidates before settling the following May on Mr. Krzanich, an Intel manufacturing specialist.

At least seven seasoned executives departed during his five-year tenure. Analysts now see only three obvious internal choices, none of whom has the broad experience of past Intel leaders.

Some promising external candidates have declined the opportunity. One is Patrick Gelsinger, a former Intel executive who is now the chief executive of the software company VMware, who went so far as to get a VMware tattoo after the search process began.

Others have been considered by Intel’s board but rejected, according to five current and former Intel executives. These people, who requested anonymity because they were not authorized to discuss the process, said Intel directors seemed divided on what to do.

Inexperience with Intel’s business could be a factor. Five of nine directors have joined the board since 2016, while three longtime members stepped down last May. An Intel spokeswoman declined to comment.

A new chief executive would take the helm at an unusual time for the industry pioneer. Intel has recently reported some of its strongest-ever financial results, with revenue for 2018 soaring 13 percent to top $70 billion. Mr. Swan vowed rapid progress in entering new markets, while analysts have praised some forthcoming chips.

Yet Intel’s fourth-quarter results were worse than analysts expected — as was its financial projection for 2019 — while the company faces long-term questions about maintaining its dominance. Last year Intel gave up the lead in creating ever-tinier transistors on chips, the pattern observed by the Intel co-founder Gordon Moore that drives down computing and data storage costs.

Intel has repeatedly missed deadlines to deliver its next production recipe for smaller circuitry. Taiwan Semiconductor Manufacturing Company, which manufactures chips designed by other companies, grabbed the lead in the Moore’s Law race with chips that first appeared in Apple iPhones.

The delayed production process actually boosted Intel’s bottom line last year by allowing the company to put off spending on new manufacturing equipment. But the technology stumble is eventually expected to aid other chip designers, a list that now includes Advanced Micro Devices, Nvidia and major customers such as Google and Amazon.

After missing the huge market for smartphone processors, Intel recently supplanted Qualcomm in supplying cellular modems for Apple iPhones. But those sales lose money, a problem underscored in trial testimony this month by Aicha Evans, a veteran Intel executive who resigned days later to lead the start-up Zoox.

“For us, this is a very fragile business,” said Ms. Evans, a witness for the Federal Trade Commission in a case challenging Qualcomm business practices.

Whether to hang on with modems will be one key decision facing a new chief executive. But there are many other challenges, including processor supply problems that hurt PC sales in the latest quarter.

“Intel’s numbers have been fantastic,” said Stacy Rasgon, an analyst with Sanford C. Bernstein. “But if you start delving below the surface, the structural issues are fairly apparent.”

The internal candidates seen as favorites are Mr. Swan, though he has said he doesn’t want the position; Venkata (Murthy) Renduchintala, who joined Intel from Qualcomm in 2015 and oversees most product development; and Navin Shenoy, a veteran executive vice president whose unit supplies chips for computers used in data centers.

External candidates who have been considered for the chief executive post, according to the current and former Intel executives, include Renée James, a former Intel president now running a competing start-up; Anand Chandrasekher, who once ran Intel’s mobile device effort and later served a stint at Qualcomm; Sanjay Jha, a former Qualcomm executive who led Motorola; and Johny Srouji, Apple’s senior vice president of hardware technologies, whose name was reported earlier by Axios.

Ms. James, Mr. Chandrasekher and Mr. Jha are no longer under consideration, these people said.

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‘We don’t sell people’s data,’ says Facebook’s Zuckerberg

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Facebook co-founder and chief Mark Zuckerberg on Thursday renewed his defense of the social network’s business, arguing that targeting ads based on interests was different from selling people’s data.

“If we’re committed to serving everyone, then we need a service that is affordable to everyone,” Zuckerberg said in an opinion piece published in the Wall Street Journal.

“The best way to do that is to offer services for free, which ads enable us to do.”

2018 was a horrific year for Facebook, marked by a series of scandals over data protection and privacy and concerns that the leading social network had been manipulated by foreign interests for political purposes.

Despite the scandals, Facebook revenue and user numbers have continued to grow.

Making ads relevant, and less annoying, involves understanding people’s interests, according to Zuckerberg.

Facebook uses “signals” such as pages users “like” and what they share about themselves to target advertising.

“Sometimes this means people assume we do things that we don’t do,” Zuckerberg said of the business of supporting the social network with targeted ads.

“For example, we don’t sell people’s data, even though it’s often reported that we do.”

Selling user data would not only undermine essential trust in the social network, it would go against Facebook’s business interests because rivals could use it to compete for advertising, he reasoned.

Facebook also provides users with controls regarding information used for ad targeting and lets them block advertisers, Zuckerberg pointed out.

Criticism of Facebook has included the social network being used as a platform to spread divisive or misleading information, as was the case during the 2016 election that put US President Donald Trump in the White House.

“Clickbait and other junk may drive engagement in the near term, but it would be foolish for us to show this intentionally, because it’s not what people want,” Zuckerberg wrote.

“Another question is whether we leave harmful or divisive content up because it drives engagement. We don?t.”

Facebook has been investing in artificial intelligence and adding employees devoted to ferreting out content that violates the social network’s rules.

The expense could weigh on its quarterly earnings, due for release next week.

“The only reason bad content remains is because the people and artificial-intelligence systems we use to review it are not perfect — not because we have an incentive to ignore it,” he said.

Selling user data would not only undermine essential trust in the social network, it would go against Facebook’s business interests because rivals could us it to compete for advertising, Facebook co-founder Mark Zuckerberg argued

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“We Don’t Sell People’s Data,” Says Facebook’s Mark Zuckerberg

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Mark Zuckerberg said If we’re committed to serving everyone, then we need a service that is affordable.

San Francisco, United States: 

Facebook co-founder and chief Mark Zuckerberg on Thursday renewed his defense of the social network’s business, arguing that targeting ads based on interests was different from selling people’s data.

“If we’re committed to serving everyone, then we need a service that is affordable to everyone,” Zuckerberg said in an opinion piece published in the Wall Street Journal.

“The best way to do that is to offer services for free, which ads enable us to do.”

2018 was a horrific year for Facebook, marked by a series of scandals over data protection and privacy and concerns that the leading social network had been manipulated by foreign interests for political purposes. 

Despite the scandals, Facebook revenue and user numbers have continued to grow.

Making ads relevant, and less annoying, involves understanding people’s interests, according to Zuckerberg.

Facebook uses “signals” such as pages users “like” and what they share about themselves to target advertising.

“Sometimes this means people assume we do things that we don’t do,” Zuckerberg said of the business of supporting the social network with targeted ads.

“For example, we don’t sell people’s data, even though it’s often reported that we do.”

Selling user data would not only undermine essential trust in the social network, it would go against Facebook’s business interests because rivals could use it to compete for advertising, he reasoned.

Facebook also provides users with controls regarding information used for ad targeting and lets them block advertisers,  Zuckerberg pointed out.

Criticism of Facebook has included the social network being used as a platform to spread divisive or misleading information, as was the case during the 2016 election that put US President Donald Trump in the White House.

“Clickbait and other junk may drive engagement in the near term, but it would be foolish for us to show this intentionally, because it’s not what people want,” Zuckerberg wrote.

“Another question is whether we leave harmful or divisive content up because it drives engagement. We don’t.”

Facebook has been investing in artificial intelligence and adding employees devoted to ferreting out content that violates the social network’s rules.

The expense could weigh on its quarterly earnings, due for release next week.

“The only reason bad content remains is because the people and artificial-intelligence systems we use to review it are not perfect — not because we have an incentive to ignore it,” he said.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)



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New EIA Report Predicts U.S. Energy Independent by 2020

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The U.S. Energy Information Administration forecast Thursday that America will become a net exporter of energy next year as the country ramps up its oil production in the coming years.

EIA officials anticipate the country will produce more than 14 million barrels of crude oil through 2040 while setting annual records of production at least through the mid-2020s, according to the agency’s new annual energy report. By contrast, America imported a little over 10 million barrels of petroleum a day and exported roughly 6.3 million per day in 2017, according to the EIA.

“The United States has become the largest producer of crude oil in the world, and growth in domestic oil, natural gas, and renewable energy production is quickly establishing the United States as a strong global energy producer for the foreseeable future,” EIA Administrator Linda Capuano said in a news release unveiling the study.

The agency expects U.S. natural-gas production and exports to also increase even as domestic consumption remains steady because of increased energy efficiency across different U.S. sectors. Consistently low prices for U.S. natgas will drive the demand for the product overseas, according to the report.

Meanwhile, the EIA expects U.S. renewable energy from solar and wind production to dramatically increase in the next decade, supplanting nuclear power and coal as the main contributors to U.S. power generation. The agency predicts that the share of U.S. electricity generated from coal will decrease to 17% in 2050 from 28% in 2018, while nuclear power will drop to 12% of total American power consumption by 2050 from 19% last year.

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Fremont CA police turn Tesla Model S into electric squad car

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A California police department has turned a used Tesla into a patrol car, hoping to cut the city’s carbon footprint — and the high-end, low-emissions vehicle may be cheaper than a conventional squad car in the long-run, according to police.

Police in Fremont, the East Bay city where Tesla manufactures vehicles and employs more than 10,000 workers, announced in a news release Wednesday that it will soon roll out the patrol vehicle as part of a pilot program testing if electric vehicles can meet law enforcement demands.

“We’ll know within six months to a year, either yes or no,” Fremont Police Capt. Sean Washington said, according to the San Jose Mercury News.

The city bought the 2014 Tesla Model S 85 about a year ago for $61,478.50 as a replacement for a 2007 Dodge Charger, which the department was retiring, police said. Since then, the department has spent $4,447 on a light bar, ballistic barrier, push bumper and other modifications to make the vehicle road-ready, according to the news release.

Police said the car was “the only electric vehicle that met specifications for size, performance, battery range, and safety” needed in a fully-functional patrol car. Those requirements include hard on and off braking and acceleration, as well as good steering and the ability to drive 40 to 70 miles daily, the department said. The Tesla can drive 265 miles on one charge, according to Fremont police.

But the department did list a few possible concerns: The Tesla has small seats in the front, limited room for equipment and takes about an hour to recharge.

Buying a Ford Explorer to use as a patrol vehicle would cost $40,000, and require add-ons roughly as expensive as what police spent for the Tesla, the department said. But in just five years of use an Explorer would guzzle about $32,000 in gasoline and require $15,000 in maintenance, while a Tesla doesn’t need gas and could have fewer mechanical problems, according to the department.

Fremont’s goal is to cut its greenhouse emissions 25 percent from 2005 levels by next year — and for that to happen, police have to play a role, the department said.

user21753-1548301003-media1.jpg

Police in Fremont, California, where Tesla makes its electric vehicles, are testing a used Model S 85 to see if it works as a patrol car. It’s part of the city’s goal to cut greenhouse emissions.

Fremont Police Department

“Given that Fremont Police vehicle fleet is responsible for a total of 980 metric tons of carbon dioxide emissions annually, this program has the potential to eliminate 10 percent of all municipal greenhouse gas emissions,” Washington said in a statement.

Another feature of Teslas is how quiet they are: At low speeds, electric vehicles “can barely be heard,” which cuts noise pollution while creating safety concerns for walkers and bicyclists, The Guardian reports.

Fremont police already have three charging stations and a 872 kW solar power structure, which means every gas-powered vehicle swapped out with an electric one “will completely zero out the greenhouse gas emissions associated with that vehicle’s operation,” the news release said.

Police said they’ll watch closely to keep track of the Tesla’s “performance, durability, range, costs, and unknowns that will only be fully understood once the pilot test is completed and the results are evaluated.”

Across the United States, few police departments have seriously committed to electric vehicles. Los Angeles police bought a multimillion-dollar fleet of electric BMWs, but as of January 2018, they were barely used at all, CBS Los Angeles reported.

Police in Hyattsville, Maryland — just outside Washington, D.C. — have had a Chevrolet Volt electric vehicle since 2017 that they use for patrol, according to the city website. Denver police got a Tesla back in 2017, but it’s used for outreach and community events, the department said in a video announcing its “baby” Tesla.

“When the kids see them, they’re so amazed by them,” Denver police spokesperson Jay Casillas said of the electric vehicle, according to 9 News. “It makes them come talk to us and then they don’t feel as scared of us anymore.”

Police in Fremont said the Tesla won’t be in their hands “for a few weeks,” SFGate reports.

Fremont police said they have been using hybrid vehicles, such as Toyota Priuses and Ford Fusions , since 2009. The police chief, captains and administrative lieutenants have all been driving hybrid cars since last year.



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‘We don’t sell people’s data’ —FB’s Zuckerberg | Money

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Apple’s Car Project Hit With Layoffs — The Motley Fool

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Once upon a time, consumers and investors had high hopes that Apple (NASDAQ:AAPL) might one day launch an autonomous electric car. Reports regarding the secretive initiative, dubbed Project Titan, first surfaced in 2015, and at that time Apple was reportedly hoping to launch an electric vehicle in 2019. Well, 2019 is here, but the fate of Project Titan is as murky as ever.

In 2016, Apple laid off hundreds of employees within Project Titan, as longtime hardware exec Bob Mansfield (who is leading the project) chose to focus on developing autonomous driving technology instead of exploring the manufacturing side. Test vehicles have been spotted over the years, and CEO Tim Cook publicly confirmed in 2017 that Apple was “focusing on autonomous systems.” After spending five years at Tesla, engineering exec Doug Field returned to Apple in 2018 to join Project Titan.

Finger pushing a button to start autonomous driving

Image source: Getty Images.

Now, CNBC reports that Apple just laid off 200 more employees working on Project Titan.

Autonomous driving is “the most ambitious machine learning project ever”

Project Titan had reportedly grown to around 1,000 workers at one point, but it’s unclear how many employees Apple still has dedicated to developing the autonomous systems. The layoffs are related to Field’s return to Apple, as Field and Mansfield are now leading Project Titan together and some restructuring was in order, according to the report. Some employees were affected but able to transition to other parts of the company.

Apple confirmed the layoffs to CNBC, reiterating its belief that “there is a huge opportunity with autonomous systems,” and that the initiative is “the most ambitious machine learning project ever.” That largely echoes Cook, who once referred to autonomous driving technology as “the mother of all AI projects.”

Apple is still actively testing

It’s worth noting that Apple is still pushing forward with development, despite the reduction in force. The tech titan still has test vehicles on the road, one of which was involved in a collision as recently as October, when the test vehicle was side-swiped by a Toyota Camry while in manual mode. That followed a separate collision from August when a test vehicle was rear-ended by a Nissan Leaf while trying to merge onto an expressway. The Apple test vehicle was driving in autonomous mode in the latter incident.

Companies testing autonomous vehicles on public roads in California are required to file reports detailing both collisions and disengagements (when a safety driver has to disengage the autonomous system and take control) with the state’s Department of Motor Vehicles. The state has received 129 collision reports since 2014, and Apple has only reported the two collisions mentioned above.

What comes next?

The biggest mystery remains what Apple intends to do with the autonomous technology it is developing. Licensing the technology without designing the underlying hardware is decidedly un-Apple-like, as is building a modular array of sensors that could be retrofitted or mounted on a third-party vehicle.

It seems that the only thing the company knows for sure is that autonomous driving systems will be incredibly important in the future, and will require many years of development and billions of dollars of investment in research and development. Apple is still moving forward, even if there’s some turbulence along the way.

Evan Niu, CFA owns shares of Apple and TSLA. The Motley Fool owns shares of and recommends Apple and TSLA. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.



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The Hedge Fund Manager Who Just Paid $238 Million for a Manhattan Penthouse

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Kenneth Griffin, the billionaire founder of the hedge fund Citadel, broke a real estate record on Wednesday when he closed on his purchase of a penthouse at 220 Central Park South for $238 million. It’s the highest price anyone has paid for a home in the United States, and $100 million above the previous record.

Mr. Griffin went to contract on the apartment, in a building that was still being developed, in 2015 amid a real estate buying spree that includes a London mansion he bought this week for 95 million pounds, or about $122 million. Here’s what we know about him.

Mr. Griffin’s financial career began when he was a student at Harvard, where he had a satellite dish installed on the roof of his dorm so he could trade in the relatively arcane area of convertible bonds. After graduating in 1990, he started Citadel as a small investing firm in Chicago.

Citadel managed $28 billion at the start of this year, and Forbes has estimated that Mr. Griffin is worth more than $9 billion.

In addition to the New York penthouse and the London mansion, Mr. Griffin owns two floors of the Waldorf Astoria hotel in Chicago, which he bought for just under $30 million; a $59 million penthouse on Chicago’s so-called Gold Coast; and a $60 million condominium in Miami, among other properties.

Mr. Griffin owns properties all over the world, but he considers Chicago, where Citadel is based, his hometown, and he is active in politics there. He donated more than $1 million to political organizations that supported Mayor Rahm Emanuel in 2015 when Mr. Emanuel was seeking re-election.

Mr. Griffin doesn’t spend his money just on real estate. He is also a well-known art collector, has donated tens of millions of dollars to museums around the United States and once spent $500 million on two paintings. A wing at the Art Institute of Chicago bears his name.

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Most expensive home in the US sells for $238 million to Ken Griffin

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This sale is the most anyone has paid for a home in the United States. The previous record was set in 2014, also by a New York property. That home in the Hamptons sold for $137 million, according to statistics compiled by Miller Samuel Inc., a real estate and appraisal consulting firm that tracks highest sales of single residences over $50 million.

The company’s CEO, Jonathan Miller, cautions that tracking the most expensive homes sold in the country is not an exact science.

“There aren’t as many as you think,” Miller said. “The banner year was 2014. In 2013 and 2014 I started noticing every couple of weeks there was a story that said, ‘this was the highest asking price in the country,’ or ‘this was the highest in California.’ In 2015 I started looking back and realized that many of those hadn’t sold. It was the pocket listings, the ones that weren’t splashed everywhere, that were selling.”

Miller said when he first heard about the property at 220 Central Park South in 2014 it was listed for $250 million. “The sale for $238 million has nothing to do with the current market. It has everything to do with 2015, which was around peak luxury,” he said. “In New York the top end is softening right now because of over-development.”

The 79-story skyscraper that contains the apartment is under construction and is right on Central Park in an area often referred to as New York’s billionaires row. It has sweeping views of the iconic park. Other big names at that building include singer Sting and his wife, Trudie Styler, according to the Wall Street Journal.

Top five most expensive US sales

The top five most expensive homes sold in the United States, as compiled by Miller Samuel Inc.:

  • 220 Central Park South, New York — Sold in 2019 for $238 million.
  • 60 Further Lane, East Hampton, New York — Sold in 2014 for $137 million.
  • 50 Blossom Way, Palm Beach, Florida — Sold in 2013 for $129.6 million.
  • 499 Indian Field Road, Greenwich, Connecticut — Sold in 2014 for $120 million.
  • 360 Mountain Home Road, Woodside, California — Sold in 2013 for $117.5 million.

About the buyer

Ken Griffin, the home's buyer and founder and chief executive officer of Citadel.
Ken Griffin is the founder of Chicago-based hedge fund Citadel and has a net worth of $9.9 billion, according to Forbes. Citadel was founded in 1990 by Griffin, who began his trading career from his dorm room in the ’80s at Harvard University when he was 19, according to the company’s website. He was able to do this after persuading Harvard to let him install a satellite dish on the roof of the dorm so he could get better access to stock quotes. Citadel is one of the most successful hedge fund empires. Griffin is also known for his charity gifts. In 2014 he donated $150 million to his alma mater, and has given approximately $700 million to charities.

CNN’s Anna Bahney contributed to this report.

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