Citadel LLC (formerly known as Citadel Investment Group, LLC) is an American multinational hedge fund and financial services company. Founded in 1990 by Kenneth Griffin, the company operates two primary businesses: Citadel, one of the world’s largest alternative asset managers with more than US$32 billion in assets under management; and Citadel Securities, one of the leading market makers in the world, whose trading products include equities, equity options, and interest rate swaps for retail and institutional clients.
Citadel Is Performing Well
In a year where the markets make no sense and multi-billion-dollar funds close, Citadel is still pumping out returns.
The $34 billion firm is up more than 16% in its flagship Wellington Fund for the year through July, while its standalone Global Fixed Income fund is up nearly 12% over the same stretch, a source familiar with the firm told Business Insider. In July, Wellington was up 2.7% and Global Fixed Income returned 2.1%.
The five strategies that feed into Wellington — equities, fixed income and macro, global credit, commodities, and quant — are all positive for the year.
Historic Profitability
The firm’s global quantitative strategies unit has had its best start to a year in its history, while the global credit unit, which is lead by former Goldman Sachs partner Pablo Salame, has had its most profitable start to a year in more than a decade, the source said.
This is a departure from the realities for many firms in the $3 trillion hedge-fund space, where quants have struggled to rebound from a volatile March, and credit funds have battled margin calls and low-interest rates. The average hedge fund, according to Hedge Fund Research, is flat for the year.
Beating The Competition
Citadel’s outpaced most of its multi-strategy peers so far this year. Steve Cohen’s Point72 is up 7% through July, while Izzy Englander’s Millennium is up 12%, according to Bloomberg. ExodusPoint, run by Michael Gelband, has returned 8.7% this year, and start-up Cinctive Capital is up 7%.
Meanwhile, smaller Chicago rivals have struggled to expand. One of the largest, Balyasny Asset Management, is trying to right its business after posting a loss last year that forced the firm to cut 20 percent of its staff. Although the firm has improved returns this year, its assets of $6 billion are half what they were. It’s hiring more employees this year, with 585 employees worldwide and 130 in Chicago, but often battling Citadel over talent.
The leader in multi-strategy world has been Balyasny’s Atlas Enhanced fund, which is up 20.5%; the firm has continued its hot start to the year.
Citadel’s credit unit is also in the process of developing a new strategy. David Casner, a former Goldman partner who was the head of U.S. equity volatility trading and global co-head of equity flow derivatives trading at the bank, started in June and is building out an equity derivatives strategy under Salame. Casner is also in charge of the firm’s convertible arbitrage strategy.
Recruitments and Career Enhancements
Today, the city has a few dozen hedge fund firms managing roughly $70 billion. In addition to the economic benefit of the business, the firms collectively employ thousands of highly paid investment and technology professionals whose spending boosts the city’s economy.
Citadel, which manages about $32 billion, is one of the largest firms in the world, and mega players like it are consolidating their control over the market.
The firm’s been recruiting across all sections of its business, poaching a pair of big names from rival funds recently. Andrew Janian, a top Two Sigma tech executive, will start at the firm next year, while Isaac Chang, formerly AQR’s head of trading, is joining in September as Griffin’s first-ever head of execution trading for fixed income.
Griffin meanwhile has named Jonas Diedrich, who started as an analyst at the Chicago-based firm more than a decade ago, to a new role as the European head of Global Equities, which is run by Justin Lubell, who Griffin recruited from rival fund Point72 last year.
Citadel declined to comment on performance.
Synopsis
- Citadel’s flagship Wellington fund is up more than 16% through July, and its standalone Global Fixed Income fund is up nearly 12% over the same time frame, sources tell Business Insider.
- Ken Griffin’s $34 billion firm has five different strategies feeding into Wellington, and all five are positive for the year when the average hedge fund has lost money. Two strategies, sources say, have had some of their best years ever in 2020.
- Citadel has continued to recruit top talent across different parts of its business; the firm is adding Two Sigma executive Andrew Janian to its tech team next year, and former Goldman Sachs partner David Casner started in June on the credit team.
Leave a Reply
You must be logged in to post a comment.