Betting on futures — trader comes up more than even

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by Paula C. Squires
Virginia Business
June 2004

Six times a week, 48-year-old G. Kevin Bruce hits the weight room at the Tuckahoe YMCA and pumps iron for at least an hour. All those bench presses—at one time he could lift as much as 330 pounds—are obvious by his taut biceps and trim frame. What’s not apparent is that the same discipline that drives Bruce to the gym has made him a multimillionaire as a commodities trader.

Not one to flaunt his wealth, Bruce drives around Richmond in a ‘96 Ford Ranger pickup. Until recently, he cut his own grass. And he finally went ahead with what is usually a teen-age rite of passage: he’s wearing braces to straighten his teeth. “It’s something I should have done years ago,” he says in typical understatement.

Bruce has a net worth of $85 million. He made his money working as a trader in the futures markets for two banks before starting his own company, Strategic Capital Corp. Bruce trades commodities ranging from corn to crude oil, treasury bonds and foreign currencies. To tap into foreign markets, it’s not unusual for him to work from 2 a.m. to 4 a.m. in the morning when those markets are open. “I’ll work a couple of hours, go back to bed and get up and start trading again,” he says.

Bruce runs his private firm with a partner and one other employee. As president, he owns 75 percent of Strategic Capital, which last year had earnings of $4.8 million, including client and proprietary trading Bruce did for himself and his partner. Bruce makes the same trades for his personal, parallel account as he does for the company’s investment pool, so investors know he’s sharing the risk.

He’s been trading now for 25 years, and realizes that not everyone shares his passion. “People have an idea that futures are extremely risky, which they can be,” he acknowledges, because of the tremendous leverage. The ratio for a typical trade is 30 to 1, meaning a client has the potential to control a large amount of a commodity for a relatively small investment. For instance, an investment of $3,000 could control as much as $100,000 worth of treasury bonds.

Whether investors make money depends largely on a trader’s ability to anticipate price movements in a volatile commodities market buffeted by factors as diverse as the weather. Bruce follows market trends, buying and selling commodities during profitable windows of time. For instance, he says his company recently made $1.5 million trading on crude oil futures by buying the oil at $29 dollars a barrel and selling it four months later for $36 a barrel.

Trading in futures requires more than guesswork. Bruce follows a strategy he first developed while a graduate student at the University of Georgia. Since then, he’s added risk-management techniques. “It’s mathematical. It tells us when to buy and sell and how much to buy and sell based on the odds of that trade being a winner or a loser,” he says.

Just a trace of an accent reveals Bruce’s Southern roots. He and two siblings grew up in the small town of Winder, Ga., about 20 miles from Athens. His father sold insurance and his mother worked as a bookkeeper. He got hooked on trading while taking a college elective. “Our professor gave us a fictitious $10,000 to buy and sell six agricultural commodities. I turned $10,000 into $30,000 in three months, and I thought, ‘I can probably do this in real life.’”

A finance major, he worked for a bank in Charlotte, N.C., before joining what was then Signet Bank in 1986. While there, he headed the bank’s proprietary trading, managing as much as $100 million. Signet merged with First Union Bank in 1997, and Bruce worked as a managing director in its proprietary trading unit until 2000, when he went out on his own.

Typically, Strategic Capital works with qualified investors who have either $1 million in net worth or an annual income of $200,000 and who can afford to invest a minimum of $100,000. The pool functions like a mutual fund with everyone getting a piece of the profits and sharing in the risk.

A bachelor, he lives in a 6,000-square-foot house on Tuckahoe Creek in Goochland County. When not trading or lifting weights, he enjoys sports cars, taking his Corvette or a ’91 Porsche out for a drive. He describes himself as “low-profile” and says most people have no idea of his wealth. “I guess that means I’ve done a pretty good job of just being me.”