Bloomberg News

Jane Street’s Reynolds Turns to Art With Trading Fortune

November 09, 2012

Jane Street’s Reynolds Turns to Art Schools With Trading Fortune

Tim Reynolds, a former trader at Jane Street Capital and founder of Ani Art Academies, is joined by members of his family as he rings the closing bell at the New York Stock Exchange on Sept. 24, 2012. Photographer: Valerie Caviness/NYSE Euronext via Bloomberg

Tim Reynolds, who made his fortune transforming mathematicians into traders at Jane Street Capital LLC, has a new obsession: teaching poor students to master photorealistic painting.

Reynolds stepped aside in September from the multibillion- dollar-a-day arbitrage operation he co-founded in 2000. He’s already donated more than $10 million to endow free art schools in Anguilla, the Dominican Republic, Pennsylvania, Sri Lanka and Thailand, and he’s developing luxurious hotels nearby to bring in potential collectors.

“It will change the art world in a way,” Reynolds, 46, said in an interview last month on the porch of his waterfront home in Middletown, New Jersey. “You’re going to see very specific art movements come out of the schools and develop on their own.”

Reynolds, a trim and intense man with black hair who gets around in a wheelchair, said he thought artists were born with their talents until about four years ago, when he learned from a pair of historical novels that Vincent Van Gogh and Michelangelo struggled to master their craft.

He started trying to teach himself to paint, squeezing in a few hours of practice a week when he wasn’t at Jane Street’s offices at the southern tip of Manhattan. When progress came slowly, he found an instructor who eventually led him to Anthony Waichulis, who was training students to advance from shading charcoal to creating photorealistic paintings of marbles, skulls, people and pets.

‘Deeply Embedded’

“As I started to understand the methods and skills that Anthony was teaching and the way he teaches them, it seemed obvious to me that it was highly replicable,” Reynolds said in the Oct. 26 interview.

The idea of spreading Waichulis’s techniques to poor people around the world consumed Reynolds. He recruited the painter to design the curriculum for a network of schools.

Reynolds, who declined to say how much money he’s made, started his career selling industrial buildings in Southern California after graduating from Claremont McKenna College with a degree in economics. Before leaving to get an MBA at Cornell University, he took a few months to work as a bartender at a Club Med resort in Turks & Caicos, where he met his wife, Caroline, a French business student who was interning there.

“I thought a lot about coming back and building a school,” he said. “It was something that was deeply embedded in my mind.”

Ivy Quants

At Cornell, Reynolds was fascinated by classes he took in arbitrage -- the art of making money by trading securities that are temporarily mispriced. He was a floor trader at Susquehanna International Group LLP in New York when he decided to start Jane Street with three partners, whom he wouldn’t name.

The firm doesn’t manage money for investors, trade for customers or bet on which stocks go up or down. Instead, Jane Street recruits engineers and programmers from Ivy League schools and teaches them to write computer programs that rapidly buy and sell stocks, collecting pennies at a time.

“We were trying to find people who were brilliant mathematicians and programmers and then give them an education as to how to discover and execute arbitrage trades,” Reynolds said. “It’s really, really hard.”

Reynolds wouldn’t say much about his work at Jane Street saying the company has avoided publicity to make it more difficult for competitors to figure out how it makes money. Jack Johnson, the firm’s director of human resources, didn’t respond to four phone messages after saying he’d speak on the company’s behalf.

Ani Art

Jane Street, which employs about 300 people, accounts for between 1 percent and 2 percent of all U.S. stock trades, moving $4 billion to $8 billion of shares a day, Yaron Minsky, a programmer for the firm, told students at Pittsburgh’s Carnegie Mellon University in a talk posted on the video-sharing website Vimeo.

“The money that we use, the working capital for the firm, basically comes from the people who manage the firm on a day-to- day basis,” Minsky said.

Members’ equity, a measure of the firm’s assets less its debts, at Jane Street’s broker-dealer subsidiary grew to $585 million last year from $18 million at the end of 2001, according to filings with the U.S. Securities and Exchange Commission.

On Anguilla, an island in the eastern Caribbean, local students are already practicing charcoal shading at one of Reynolds’s schools, called the Ani Art Academies. The studio is about 150 yards from an Ani resort, where hedge-fund managers and sports-team owners pay $42,000 a week to rent five-bedroom glass villas perched on a cliff above the sea.

Vacation ‘Keepsake’

Reynolds opened another Ani academy in the hills above Rio San Juan in the Dominican Republic last week. He said he’s found “absolutely stunning” plots of land for resorts there and near future schools in Sri Lanka and Thailand. Profits will help fund the academies, and the villas will be decorated with student art that’s for sale.

“People want to bring back a keepsake from a dream vacation,” Reynolds said. “Now the $2,000 that goes to that artist, that’s transformative and that’s one transaction.”

Students are given free materials and meals at the Ani schools and Reynolds said he plans to provide food for their families as well so they can concentrate on completing the 6,000-hour program.

“Over 10 years, we’re going to have several hundred great artists coming out of a small community in a place that happens to be an exotic tourist destination,” Reynolds said. “I believe that’s going to start a virtuous cycle.”

‘Pedestrian’ Art

Waichulis’s curriculum is methodical. Students start by making lines that fade from black to white, then move on to drawings of spheres and other shapes. Painting begins in the third year of full-time study.

Sam Messer, associate dean of Yale University’s art school, said the program imposes a European way of thinking about painting and ignores regional traditions. Waichulis’s students produce “pedestrian” work, he said.

“He can now take what he thinks is his idea of art and bring it to the rest of the world? It’s offensive,” Messer said. “A million people in the world know perfect grammar but they can’t write anything of interest.”

Reynolds said students won’t be pushed to paint in a certain style, though he says much contemporary abstract art is a kind of con like “the emperor’s new clothes.”

“I’m just against lazy execution,” he said. “Anybody who goes through this program, they leave with a full toolbox.”

Trompe L’Oeil

Many of the paintings done by Waichulis and his students use a traditional technique called trompe l’oeil, French for “deceives the eye,” according to Holly Hughes, who heads the painting department at Rhode Island School of Design in Providence. There are successful contemporary artists who paint hyperrealistically, she said.

“Some people feel as though they have to defend it, but I think it’s a perfectly valid thing,” Hughes said. “It’s one among many languages of painting.”

Reynolds said he spent about 270 hours trying to draw identical spheres before he let himself make a drawing of pool balls with fuses and an egg on top. The picture, which he named “Scrambled Eights and Bangers,” is in his dining room, where the walls are covered with photorealistic paintings by his friends and teachers.

Spinal Research

Reynolds has also given $8 million to fund research into spinal injuries over the past several years. He was paralyzed in 2000 when the livery car taking him home from Jane Street’s first Christmas party crashed into a barricade on the Pulaski Skyway in New Jersey. Reynolds said he returned to work within three months.

He also made plans to open a school for disabled military veterans in New Jersey or Maryland after a friend suggested it, he said.

“If somebody lost their legs in Iraq or Afghanistan, that can be a pretty devastating thing,” Reynolds said. “Maybe they feel like they don’t have any work they can do. It’s not true but I know it’s kind of an overwhelming delivery of bad news.”

He now practices drawing for 10 or 12 hours two days a week at Waichulis’s studio near Wilkes-Barre, Pennsylvania. He’s only made it about halfway through the curriculum, which two of his three children are also studying.

Much of his time is spent hunting for potential sites for resorts, negotiating real-estate deals and visiting his schools, Reynolds said as he showed off architectural renderings for the villas in Thailand, which will have a lotus-ringed swimming pool and a meditation pagoda.

“I’m actually looking forward to getting old,” Reynolds said. “When I’m old I get to see what happens and I can’t wait to see what happens.”

To contact the reporter on this story: Zeke Faux in New York at zfaux@bloomberg.net.

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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