It was almost noon on a Thursday in mid-May, and Chris Brown found himself putting work aside to mull over a letter he was writing to the legislators in his home state of Ohio. Brown wasn’t alone; some 237 other Ohio residents were also taking to their laptops to fire off written testimony expressing their opposition to — and outrage about — a proposed bill that would ban gender-related medical treatment for minors in the state. The legislation is among about 650 anti-trans, anti-gay bills that have been circulating in mostly Republican-controlled statehouses throughout the country.
“I am writing to you today as a native Ohioan, an Air Force veteran who served seven years of active duty at Wright-Patterson Medical Center, and an MD,” Brown’s letter to the state representatives began.
“HB68 does not ‘save adolescents,’” Brown wrote, referencing the legislation and its stated intent, “but rather it endangers their lives. The bill’s reasoning is based not on medical science — all mainstream physicians, including the AMA, AAP, and Endocrine Society, support the standard, safe, effective stepwise approach to gender-affirming care for transgender and nonbinary youth.” Such care can include puberty blockers, cross-sex hormones, and — very rarely — surgery. Instead, Brown argued, the bill was “propagated . . . by a misguided subset of Christian fundamentalists.”
Brown’s letter went on to say that “being trans is not a delusion, nor is it a psychological malady” and that recent studies have shown that trans women’s brains are “statistically significantly different” from those of people who identify as male from birth, known as cisgender.
What the letter didn’t say is that 46-year-old Brown is a top-performing hedge fund manager whose firm, Aristides Capital, has had a 15 percent annualized return since its launch in 2008, earning it Barclayhedge’s classification in 2022 as the top long-biased equity hedge fund of its age (or older) based on risk-adjusted performance. The performance is all the more stunning because Aristides has maintained a value orientation during a time when the strategy has been largely out of favor.
More to the point, following three years of treatments, the twice-married father of four has come out as trans/nonbinary.
“I don’t identify strongly as a man or a woman,” explains Brown, who uses both “he” and “they” pronouns. His formerly balding head now ringed with dark-brown curls, Brown has opted to wear a feminine Portland Thorns T-shirt with two red roses atop the shoulders — showing his support for the Oregon women’s soccer team — while speaking to Institutional Investor over Zoom. Brown says he prefers women’s clothes because they are made of “soft” material that “falls nicely” on his slender body. He “hates” wearing pants and suits.
“Nonbinary” is a relatively new term in the LGBTQ+ lexicon. (“Genderqueer” was the previous designation, says Brown). Although nonbinary is a gender identity in its own right, “a lot of people try out nonbinary identities as a starter pack on the way to being trans,” Brown says. “It’s a safer, more incremental step. It gives you room and space to figure out where you belong. For me, I think being nonbinary is probably where I will stay.”
Thinking of gender as a spectrum makes sense for Brown. Before coming out as trans/nonbinary, he acknowledged being on the autism spectrum, referring to himself as an “Aspie,” for Asperger’s syndrome.
Late last year, Brown broke the news of his transition to investors in Aristides. It was a shock to some of them. Andrew Tobias, the best-selling financial author, former treasurer of the Democratic National Committee, and Aristides’ first outside investor, says he was “completely surprised” when Brown called to tell him. “He probably had to say it twice before I really got it,” says Tobias, who in 1973 wrote a pseudonymous memoir about growing up gay.
Gay individuals now make up more than 7 percent of the U.S. population, and public acceptance has become widespread. Although a raft of anti-gay and anti-trans bills, including Florida Governor Ron DeSantis’s infamous “Don’t Say Gay” law, are making their way through state legislatures, lawmakers appear to be out of touch with the mood of most Americans. For example, a 2022 Gallup poll found that 71 percent of Americans approve of gay marriage — a huge shift from only 27 percent in 1996.
There are fewer transgender and nonbinary individuals, with only 1.6 percent of Americans identifying as either, according to a 2022 Pew Research Center poll. Pew found that 60 percent of Americans think a person’s gender is determined by the sex assigned at birth, up from 54 percent in 2017. Anti-trans talking points may have influenced that thinking, as the increase occurred as anti-trans bills became a Republican priority.
Many of Aristides’ investors are Republicans, and one billionaire family office pulled its money because of a principal’s distaste for Brown’s politics, which Brown has not been shy about expressing both in investor letters and on Twitter. Brown, who says he is a social democrat, considers himself a moderate in a world where growing authoritarianism has pushed the center to the left. The exiting investor “had a very conservative vibe and could never get comfortable with us,” says Brown. “There’s this ‘Shut up and dribble’ mentality.”
Brown isn’t one to stay quiet. “Chris feels there is a moral reason he should be speaking out on these issues,” says Muddy Waters Capital founder Carson Block, who says he invested in Aristides in 2021 after hearing about “this off-the-beaten-path fund manager out in Ohio who just puts up insane numbers.” Block says Brown doesn’t care whether his outspokenness impedes his fundraising. “You’ve got to respect that. He’s not going to be what people want him to be. He’s going to be himself.”
Most other investors apparently agree: Aristides’ returns have simply been too good to argue with.
“If you’re worried about something like ‘When you go woke, you go broke,’ well, realistically you’re probably not too worried about that or you wouldn’t be an investor in a fund managed by me,” Brown wrote to Aristides investors last December. In the same letter, he revealed he had begun taking gender-affirming medications in the summer of 2020, “and our performance since then has been pretty much the opposite of broke.”
“When you don’t have to present yourself to the outside world every day, you just have more time alone. You’re like, ‘Well, who am I?’” Brown explains. The recognition of one’s mortality that Covid presented also was a factor. As Brown puts it, “This life is short, and I want to live it. I want to be the best me I can be and not grind away being something that I’m not.”
He says he had felt for some time that he was trans/nonbinary but “lacked the language to understand” what to call it.
During the pandemic, Brown started treatments for hair growth, saying that his wife had joked that his semibald head was so severe that he looked like a gangster. But it wasn’t until late 2021 that he ramped up the regimen by suppressing testosterone and adding estrogen. He admits it took a bit of tinkering, with the help of a physician, to get the dosages right. Brown’s own background as an internist with training in pharmacology has been a help as well.
“Having less testosterone, and having estrogen, has really given me a great sense of calm,” says Brown. “I don’t know if that calmness and lack of anxiety [are] the difference between how it feels to be a woman versus how it feels to be a man, or if that’s just having a sense of feeling good about my gender and not worrying as much about things in general because I feel better about myself and am just generally happier.” (Gender identity is not the same as sexual preference; Brown’s sexuality has not changed.)
His gender identity does set Brown apart from virtually all other hedge fund managers. As he points out, the world of finance is about as white and male as it gets, and that is even more pronounced in hedge funds.
About a year and a half ago, Brown mentioned on his semi-anonymous Twitter account that he was taking hormones. When asked if he would be open to a profile of his journey, Brown originally was reluctant to go public to a larger audience. In the end, however, he spoke with II for five hours.
Coming out can be a fraught experience, as it was for Lily, a 27-year-old transgender woman and the chief investment officer of a Florida-based fund, Novi Loren, whom Brown met on Twitter. Until she was doxed on Twitter recently by a few men in finance who managed to dredge up some pre-transition photos of her, Lily (who asked that II not use her last name) says she operated in “stealth” and was “passing” as a cisgender woman. Before being doxed, Lily had gained some notice from Bloomberg and the Financial Times for her financial commentary and quantitative research that helped explain the meme stock craze in 2021. Many of her followers rallied behind her once she was outed.
Lily, who says she realized she was transgender when she was 12, fully transitioned almost seven years ago. At that time, she decided to drop out of a PhD program in bioinformatics at a major university and go into finance because she knew the costs of her medical transition would be exorbitant. Had she transitioned at a younger age, Lily says, it would have been less painful, less traumatic — and less expensive.
“I’ve always known I needed to make a lot of money, because it is expensive and it is a hard life,” says Lily, a pretty young woman with long brown hair and a soft voice who lives in the San Francisco Bay area. Despite her original reluctance to be known as trans to the greater world, she is glad to be the type of role model she did not have growing up. “Hey, I’m a trans person. I live a normal life. My family loves me. I have a good job. You can be trans and you can have a great life,” she says.
Discrimination against trans people is rampant, and Brown knows he is fortunate to be wealthy and his own boss. He has found acceptance from his wife — a doctor (and endocrinologist) Brown met when both were in their residencies — as well as his children. In fact, when Brown told one of his 14-year-old twin daughters that he was trans/nonbinary, her response was simply, “Of course you are.” Aristides employees were likewise unruffled when they heard the news. “We all support him and just want him to be happy,” says Daniel Nall, the second employee Brown hired and now Aristides’ portfolio manager and chief compliance officer.
“What’s great is that people are beginning to get to know trans people,” says Tobias. “This is one way that prejudice gets worn down.” He adds that “no one who gets to know Chris wouldn’t like him.”
But for Brown, growing up during the 1980s was not easy.
Brown was raised Catholic in a conservative Republican household where, as he once put it on Twitter, “I was expected to be perfect or else shit blew up.” An only child, he was born in Akron, Ohio, but spent most of his youth in Kentucky, where his father worked as a chemical engineer for a few different companies. Brown’s mother, who did not work outside the home, wanted her son to be a doctor, and his early life was spent trying to meet her expectations. (Brown says he has come out to his mom, who is a staunch Fox News–watching conservative, but doesn’t talk to his parents often.)
As a youth, he recalls, “I had a very simplistic worldview. I was very, very, very focused on math and science.” After he finished seventh grade, the family moved from Louisville to rural Kentucky, and Brown skipped a grade — so he “all of a sudden” was in high school.
“I was so fem-presenting, without trying to be, that in high school I was relentlessly bullied for being gay,” Brown says. Although he wasn’t gay, as a teenager Brown was interested in typical female pursuits like baking and gardening and his close friends were all girls. When he visited his grandmother in Akron, where he slept in her bedroom, he would try on the dresses he found hanging in the closet.
In Brown’s early days at the University of Chicago, which he attended on a full tuition scholarship, he was still pretty buttoned up, even serving as the editor-in-chief of the conservative student newspaper. But exposure to other ideas and people in the university environment began to shift his political views leftward.
At the age of 19, he married for the first time, then had a child. He later attended medical school at the University of Kentucky on an Air Force scholarship — which meant he had to do time in the military. Brown was thrust back into a conservative, testosterone-filled culture, serving seven years as an Air Force doctor. “When you go into the military, they tell you, ‘Here’s how you’ve got to be. You’ve got to walk like you’re holding a roll of quarters’ and all that stuff,” he says.
Even in the Air Force, however, Brown managed to be something of a rebel. He once fought his superiors’ command to put patients on Vioxx instead of Celebrex, even though the data was showing Vioxx to be extremely dangerous. (It was soon taken off the market.)
“One of the great things about being on the [autism] spectrum is that we are generally not afraid to speak our minds or piss people off, and we say what we think and we criticize,” notes Brown. “In a world where 10 percent of the population is on antidepressants and people are like, ‘Oh, everything’s fine,’ and where the best way to get promoted in corporate America is to be the least threatening guy, that’s not us.”
He likes to tell the story of being invited to attend a basketball game with his Air Force hospital commander, who introduced him to another high-ranking officer by saying, “This is Chris Brown. Some people think outside the box. Chris doesn’t even know where the box is.”
Brown says those comments weren’t meant as a compliment. But being an outsider can be a huge asset for a hedge fund manager.
Launching a hedge fund in the midst of the great financial crisis, as Brown did, was certainly an outsider move. As early as 12 years old, Brown had been dabbling in the stock market, and he began trading a quant strategy in early 2007. “I was just killing it,” he recalls. But when Brown decided to use those results to start soliciting investors for Aristides, he quickly discovered being a physician didn’t automatically translate into fundraising success. Shy of the $500,000 needed to open an account at Goldman Sachs in August 2008, he turned to his credit card. “I literally took a $30,000 cash advance on a credit card to get us over that minimum. This was while my wife was pregnant with twins.”
In the end, the gamble was worth it, for him and for those who’d lost money elsewhere and were willing to take a look at something new. “Being able to do well in 2008 and then in 2009 showed people, hey, maybe we know what we’re doing.” (Aristides gained 14 percent in the last five months of 2008 and 52 percent in 2009.)
The Greek “Aristides” means “best” in English; it was the name of an Athenian warrior and statesman. Brown, however, says the fund was named after a horse that won the first Kentucky Derby. “The horse was small and overachieving, and his victory marked the beginning of a great tradition,” he explains.
Aristides has always run its equity strategy with a quant overlay, arbitrage trades, and a healthy dose of shorts. The variety of strategies has come in handy during times of great dislocation in the markets. Early on, Brown says, “We had a great preferred arbitrage trade in Lehman where the Lehman C and D [classes] were worth twice the other Lehman preferreds. People just suddenly forgot this information. Instead of trading at 1.95 times the other Lehman preferreds, they were trading at 1.3 times. And so you could set up an arb trade where you’d make money, whether they’d bail out Lehman or not.”
A recent arb trade on AMC (Aristides was long the preferred stock and short the common) was one of last year’s top performers, accounting for almost 4 percent of December’s gains. The fund was up about 7 percent for the year. In January, Brown said he didn’t expect 2023 to be a “cakewalk,” and it hasn’t been. As of mid-June, Aristides was up slightly for the year.
“This is a very unusual market,” Brown points out. “There are stocks that are worth easily ten times more than they should be.”
Brown explains that Aristides hasn’t had many blockbuster trades. “The reason you get the return stream that we’ve had with the risk stream that we’ve had is we have a ton of positions and we make a ton of trades. And it’s really boring to talk about.” (Aristides, even though it has relatively small assets under management of $212 million, typically owns 500 or 600 securities at one time.)
That said, Aristides is known for its expertise in shorting. Last year, its shorts on both Tesla and Cassava, a biotech stock that has been an activist short play, were among the fund’s top winners. Brown’s medical expertise has helped with several biotech shorts, including that on CytoDyn, whose former CEO was charged last year by the Justice Department and the Securities and Exchange Commission with insider trading and fraud. CytoDyn had originally billed a new drug as an HIV treatment, then claimed it could also be used for Covid.
Brown says Cassava and CytoDyn are examples of the type of shorts he favors — “the fraudy small-caps that retail loves” — and of what Aristides is looking for now.
He adds that investing is a poker game in one respect. “If the price keeps going in one direction, maybe there’s something going on that you don’t understand out there.” He argues that “the best part of our firm culture is we really try to not dig in on things when things aren’t acting our way. If something’s going against us, we want to know why. We’re not afraid to change our minds.”
The culture war being waged against the LGBTQ+ community may seem irrelevant to asset management, but there is a connection. That’s because having a “grasp of reality,” Brown says, is more important than anything else in investing. “If you don’t understand the facts to begin with, you’re going to make really stupid investment decisions.”
Brown is openly incensed by the misinformation promoted by several Republicans in states that are outlawing drag performances, banning books about gay people, and prohibiting transgender women from participating in female sports and even going to the bathrooms of their choice. These politicians are also making gender-affirming treatments for minors illegal. (One Florida legislator even referred to transgender people as “mutants” and “demons.”)
“Do any of the facts hold up?” Brown asks. “There’s thousands of people today ranting on Twitter about 12-year-olds getting their genitals chopped off and all sorts of imaginary shit that just doesn’t ever happen. And you’re just like, ‘How did that happen?’ I mean, it was obvious that there was a very deliberate Christian right-wing misinformation campaign.”
In one widely reported instance, claims about “morally and medically appalling treatment” of children at the Washington University Transgender Center at St. Louis Children’s Hospital — from a former employee who made her allegations on the Free Press, a conservative website — have been refuted by parents whose children received treatment there. An investigation by the university also found no basis for the allegations.
Brown points to a decision this month by a Florida federal judge who temporarily blocked portions of a new state law that bans transgender minors from receiving puberty blockers, saying the statute was “an exercise in politics, not good medicine.” Judge Robert Hinkle added that “the overwhelming weight of medical authority supports treatment of transgender patients” with puberty blockers and hormones, saying the “benefits outweigh the risks.” To deny treatment, he said, would “increase anxiety, depression, and the risk of suicide.” (Since the Florida ruling, federal judges in Arkansas and Indiana have blocked similar gender health care bans.)
Many transgender people get no medical treatment at all, Brown points out. It’s simply too expensive. “One of the most important things to understand about trans people is that being on medicines and changing your body and using pharmacology don’t define trans-ness at all,” he says.
Brown works out of his home office in Toledo, Ohio. His team was scattered during Covid, but last year, Brown moved Aristides’ now seven-person firm to Louisville, Kentucky. It is located in the same office building as the Democratic governor’s re-election campaign, in a trendy neighborhood called the Bourbon District.
As far as culture wars go, in some ways Kentucky might be even worse than Ohio. In March, the state’s lawmakers overrode the governor’s veto (his first) to pass what the ACLU has called “the worst anti-trans bill in the nation,” Brown wrote to Aristides investors. The bill has a “Don’t Say Gay” provision that prohibits students from receiving any information regarding sexual orientation and gender identities, prevents transgender and nonbinary students from being identified by their preferred pronouns, and includes the kind of bathroom and gender health care bans being pushed elsewhere.
Not only is the legislation “stunningly cruel,” Brown wrote, it’s also bad for business. Most Kentucky voters said in a recent poll that they opposed the bans, but gerrymandering in Kentucky ensured that a Republican supermajority in the state legislature could overrule the Democratic governor.
“If you are the parent of a trans or nonbinary kid, or really any queer kid, do you want to be in Kentucky right now?” Brown asked in the recent letter to investors, adding that the state’s abortion ban — also opposed by citizens — is hurting the business climate. “Kentucky, you are not making it easier for us to compete with New York and San Francisco for the next analyst we are trying to hire.”
Indeed, since the 1973 Roe v. Wade Supreme Court decision assuring the right to an abortion in the U.S. was overturned in 2022, Brown says, “it is a lot harder to hire qualified women. Very few people want to go live and work in a red state.”
The political environment is not an academic issue for him, despite his relative privilege. “I have invested a lot in my community,” he says. Brown, who lives in what he calls the “swanky” Ottawa Hills neighborhood of Toledo, says he founded a soccer club there, plays tennis and basketball, and has been active in the schools. His interest in gardening led Brown to extensively landscape the property, planting many fruit trees and native plants.
“I have a lot of friends here,” Brown notes, including some who are Republicans. “The fear that things would get so bad here that we would have to pick up and move, be it just to Michigan, or that things would get so bad in the whole U.S. that we’d have to go to someplace like Toronto — it’s in my mind at least once a week. It is a very real weight for me.”
He continues, “I hate it. I think it is a very toxic, sad thought, and the only way that I can function is to put it to the back of my head and try to approach things with hope and try to think about the good that I can do for the world. But it absolutely sucks — and it’s important for that to be said.”
