Morning Coffee: The 31-year-old who’s made $250m and is leaving the casino. The richest central banker there’s ever been
There is no shortage of folk wisdom to tell you how to make a huge amount of money. “Fortune favours the brave”, for example, or “it’s better to be lucky than smart”. “The early bird catches the worm” and “where there’s muck, there’s money”. More actionably, it’s usually a good idea to see what the really rich are doing and try to copy them. So when someone like Christopher Eppinger heads for a previously obscure Latin American market, it’s worth paying attention.
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Eppinger has followed all the advice – in his relatively young career he’s been smart, lucky and brave, and has made profits of $250m in the oil trading market over the last three years. He’s achieved it by not being afraid of getting his hands dirty, both literally and metaphorically. When nearly everyone else in the oil market regarded Russia as a compliance risk not worth taking, Eppinger was one of the few traders to realise that the sanctions were not absolute and that it was possible to deal in Russian oil legally, at capped prices which provided for extraordinary margins.
Before he was able to get into that sort of position, he served a hair-raising apprenticeship in the commodities trading business. Having been introduced to Marc Rich by the father of a schoolfriend, Eppinger ended up in Kazakhstan, buying crude oil for cash and transporting it to a refinery in “weird, old, small cars”. There was apparently so much sulphur in the air that your teeth started to hurt if you stayed too long.
From there, he went through a few more rounds of adventures before setting up his own trading house with a specialism in getting crude oil to a UAE refinery from places that other traders don’t like to deal with. Eppinger apparently ran his company CE Energy from his iPhone and claimed not to touch a computer himself, but he seems to have not only managed the Russian trade skilfully, but got out at the right time. On the basis that “it’s important to leave the casino while you’re still winning”, he shut the operation down earlier in the year, and so has never had to worry unduly about the Strait of Hormuz.
Now he’s in Guyana, claiming that it’s a country with larger hydrocarbon reserves than Norway which are practically undeveloped. He’s set up a new company called Petrichor Energy, bought a quarry and is bidding on shipping contracts.
When you look at a story like this, it’s difficult to extract the career lessons. People like Eppinger (and Marc Rich, and many other of the legends of the physical commodities market) can build huge fortunes and accumulate fantastic anecdotes, but for every such story there might be a couple of dozen equally aggressive types who took similar risks with worse consequences. He might just be a perfect illustration of the best success strategy of them all; right place, right time.
Elsewhere, the financial disclosures coming out of Kevin Warsh’s appointment to the Federal Reserve are pretty eye-popping. He has two investments in a hedge fund vehicle run by Stanley Druckenmiller, which are at least $50m each and might be quite a bit more. He also has stakes of undisclosed amounts in Polymarkets, SpaceX and several crypto firms, among his 300 investments in private companies, many of which couldn’t be fully disclosed because of confidentiality agreements. And just over $750k in checking and savings accounts, so he doesn’t need to worry about picking up any restaurant bills.
Where does it all come from? Back in the 2000s, Warsh worked for Morgan Stanley as an Executive Director in M&A, but no matter how frugal you are, that sort of bonus doesn’t compound to a nine-figure sum. He is also married to the heiress to the Estee Lauder cosmetics fortune, but it looks like his money has mainly been generated since his first appointment to the Fed by George W Bush. In the last year, he received more than $13m in consulting fees. It just goes to show that public service doesn’t necessarily have to mean taking a vow of poverty.
Meanwhile …
Despite complications in getting the stuff in and out of the Gulf, the volatility in oil markets has delivered very strong conditions for physical traders. (FT)
After only a year at Barclays, Joseph Kerkor has left to become head of emerging markets credit trading at ING. He was a former Goldman and BNP Paribas employee who was an Executive Director at Barclays and will run a team of five at the Dutch bank. (Financial News)
Alua Capital, which launched strongly in 2020, has departed the field. It didn’t lose money, but annualised returns of 4% since inception weren’t really worth the risks of long-short equity, so founders Marco Tablada and Tom Purcell decided to do the decent thing and wind up. The fund was launched with their family offices as the main investors after they left Lone Pine and Viking respectively, so they’re giving quite a lot of the money back to themselves. (Hedgeweek)
AI agents used to be like junior graduate employees; you needed to check up on them because they regularly made silly mistakes or made things up. Now they’re like slightly more experienced graduates, in that they are better at concealing their mistakes and it’s harder to check up on them. (WSJ)
The market for senior London lawyers remains extremely hot, and Tom Thesing, head of the fast growing local office of Sidley Austin, is getting a bit salty at the fact that the firms he’s poaching from seem to be extending their gardening leave and notice periods. (Financial News)
Continuing our occasional series on potential alternative careers in which junior bankers could be making the same money with less stress, a London teenager managed to shoplift roughly a second year Associate salary’s worth of cosmetics. He did end up getting prosecuted, but will only be sentenced in a lower court. (FT)
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