38% is way outside the multi-manager target. And is far above competitors. For capital raising its more than they needed to show. Any ideas on what is going on.
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When things are looking too good…
The killed it on euro energy
phys nat gas as well. energy was 60% of their alpha
Source on this? I’m curious.
38% returns was only for Wellington fund right?
Right, but the others killed it as well
"All of Citadel’s five strategies—fixed income and macro, commodities, equities, quant and credit—were profitable for the year, people familiar with the matter said. That was evident in the returns of its three other hedge funds, which notched gains of more than 20%. One of the funds, Citadel Equities, was up 21.4% for the year."
Correct me if I'm wrong but my suspicion, outside of their macro trading success, is they run wider vol (maybe tighter on factor exposure) and more leverage than other platforms
As mentioned a lot it was energy trading. They own a major physical platform that no other MM would dare build for the time being. They invested a lot in it over the years and hid losses and costs to build that business. This question seems to be asked annually now as Citadel energy has now dominated 3 years in row; TTF 2020 trade, Texas 2021 trade, 2022 euro/us gas.
This is similar to how some banks owned physical energy businesses back in the day, that boosted all trading. Only difference is Ken prolly will never overhire as they did.
Prior poster also correct, you cannot allow such a business without changing vol/leverage versus a regular pod. Likewise would be using the firms own profits to invest in it over the years, as buying assets for 15 years is not in a typical pod description to investors.
i built their physical gas business. i was one of the first hires. this is correct
Hard to believe that, and there is a difference between one of the first hires and “building” that business. Knowing many people in the HF space (and looking at your post history) this seems like a George Santos embellishment. Hopefully I’m wrong though.
Dude you’re not kidding anyone. Working somewhere for a few years =\= building.
if you’d built that business you’d still work there and/or retired and worth several hundred MM, not anonymous bragging on a finance forum
Rumor was that Ken self funded the business until it got up and running
Dumb question, if he was self funding the business wouldn’t the returns from the commodity business be separate from the hedge fund the way citadel securities is?
Ya I know it’s people who have worked in that business.
My gut says Ken was up and relaxed some risks management
Ken did it while bumping Lil Wayne's 3 Peat: "Abracadabra, I'm up like Viagra"
In a year driven by fed policy and hiring that Bernanke fellow…
Good point, I was actually just grabbing a mimosa with Ken - it's all insider trading, but keep that to yourself.
Just finished watching the Madoff Netflix series and I couldn't help but think of Citadel the entire time. I have absolutely 0 evidence in saying that they're fraudulent, but it's earie how similar Citadel and Madoff Securities are. Both of Market Making divisions, both produce insane returns (obviously Madoff's was completely fake.).
I know they aren't frauds, but that series has me questioning everything. It's quite scary sometimes how little investors know.
I think the market making arm of Madoff was the one thing that was legit
It was very legit. At his peak, he accounted for 5-7% of all volume traded on the NYSE, which is pretty crazy.
Here’s a giant difference between Madoff and Citadel - Madoff never had people complaining that he was making too much money. I look at Citadels returns and asks why is he 2-4x all his competitors when I never thought pods had huge moats around them past a certain scale. You just compete for the same traders as everyone else. Madoff would never show you returns that you needed to underwrite if you were a smart investor to see he might be violating his risks controls etc. Madoff was just super consistent in what he showed.
If an HF was caught committed fraud, would the clients have to pay back the money they earned?
Wait until they finally close their GME shorts
It’s the macro pods not L/S equity
Equities still performed ridiculously well for an MM at 21%
I still don't understand how the $28Bn revenues figure is calculated though. Wellington returned 38%, GFI 32%, Equities 21% and Citadel's overall AUM are between 50 and 60Bn. How can they generate this type of revenues when charging 2-20?
You have a HF tag and think citadel charges 2-20?
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