Richard Dennis, Trading Legend, Can't Escape The Spotlight
Apr. 16, 1988
Undated (AP) _ His success as a trader is legendary and his influence on Chicago's grain markets is undeniable. But Richard J. Dennis, managing partner of C&D Commodities, disdains others' attempts to fathom his methods.
''They're wrong, as usual,'' sniffs the 39-year-old master speculator some call the Prince of the Pits.
What they're wrong about, Dennis said in a recent interview, is the fairly widespread notion that C&D intentionally manipulates grain prices by unexpectedly trading huge numbers of futures and options contracts.
In recent months it has not been unusual for C&D traders to jump into the Chicago Board of Trade's grain pits just minutes before the close of a session to buy or sell millions of bushels of corn, wheat and soybeans. The action frequently gives prices a shove in the opposite direction of the day's trend and tempts other traders, especially the independents known as locals, to follow suit.
''He likes to be able to move the market by getting the ball rolling so he can entice a lot of locals into the markets,'' said Joel Karlin, an analyst for Chicago-based Research Department Inc. ''After they've pushed it as far as they can, he gets out first and they get caught.''
''People see him coming and they either get out of the way or try to participate in what he's doing,'' J. Clark Heston, a Chicago-based trading consultant, said of Dennis. ''He certainly has an impact wider than even his own buying and selling.''
But Dennis, a multimillionaire who started 22 years ago as a $1.60-an-hour runner on the Chicago Mercantile Exchange, insists that his motives are misunderstood.
''There's an idea current in the land that the way to make money is to take a postion and then to try to push the market in the direction of your position. I think that's an absurd idea,'' he said. ''I mean it when I say I want to have as little market impact as possible. I would like to fill my orders and no one would know.
''People like stories about personalities having an impact on the market,'' Dennis said. ''We might have an impact, but that doesn't mean it's very large.''
Although C&D trades on virtually all the U.S. commodity markets, its recent activities have been most noticeable on the grain markets. Dennis said one reason may be that C&D was quick to take advantage of the expanded speculative trading limits for corn and soybeans approved by government regulators in December.
The limits were increased fourfold, allowing a single account to hold as many as 12 million bushels.
Dennis said C&D wasn't a big player in the grain markets before the increase because ''the limits were so artificially small that it didn't make any sense. Now the grains are tradable on a par with the other markets that we trade.''
C&D may also have less impact on other markets - the financial futures markets, for example - because those markets are much larger than the grain markets, where Dennis is the biggest fish in the pond.
Dennis oversees two investment funds, the Richard J. Dennis Preferred Futures Funds I and II, which are syndicated by Drexel Burnham Lambert Inc. Dennis I is profitable but Dennis II has performed so poorly that Dennis sent a letter to investors in March urging them to stick with him.
Jay Klopfenstein, president of Chicago-based Norwood Securities, which tracks the performance of futures funds, speculated that C&D's massive grain trades may be part of Dennis' plan for shoring up the Dennis II fund.
But Dennis said he is a pure technician and that all his trading decisions are based solely on his analysis of the charts and his belief that price patterns repeat themselves.
And anyone with any other theory about Dennis' motives is simply incorrect, he said.
''They're looking at our trading from their perspective,'' he said. ''They're looking at our trades through their glasses, and that's where they're getting it wrong, big time.''