Citadel and Surveyor Capital Overview

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Hey guys,

Anyone here heard of Surveyor Capital, the multi-manager carveout that's a part of Citadel? Any idea how they fare with reputation, pay, culture, etc?

Citadel as a whole is a known quantity but Surveyor looks like a new strategy in Ken Griffin's playbook.

Bobertov

Surveyor Capital Overview

Surveyor is a subsidiary fund of Citadel that operates in Boston, Dallas, Greenwich, Houston, New York, and San Francisco. The carve out has ~190 employees and focus on equities. The firm explains on the website below.

You can read more about Surveyor on the company's website.

What is Citadel Surveyor's Reputation?

Kenny_Powers_CFA - Hedge Fund Analyst:
Reputation is solid, model is very similar to Millennium and other tightly-run multi-manager platforms: very strict risk controls, multi-factor hedging and overnight rebalancing, significant leverage on the combined market-neutral book.

Pay and culture for this kind of platform isn't really the same sort of discussion as with single-manager (or even very large multi-strategy) funds because each pod is distinct and each PM has their own capital account/deal structure. Like most of those platforms if the book does well, the team makes a LOT of money, but you can also get blown out and it's not a given that the PM chooses to share.

User @xqtrack", a hedge fund analyst, compared Surveyor Capital to Lone Pine, Shumway, Viking and Maverick.

xqtrack - Hedge Fund Analyst:
Lone Pine, viking, maverick have better reps as places to be as an analyst. Not sure about shumway, probably less so. That being said, life in the HF world is so idiosyncratic that it's best not to get wrapped up in the WSO prestige wars.

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Comments (25)

 
Feb 12, 2015 - 7:59am

Reputation is solid, model is very similar to Millennium and other tightly-run multi-manager platforms: very strict risk controls, multi-factor hedging and overnight rebalancing, significant leverage on the combined market-neutral book.

Pay and culture for this kind of platform isn't really the same sort of discussion as with single-manager (or even very large multi-strategy) funds because each pod is distinct and each PM has their own capital account/deal structure. Like most of those platforms if the book does well, the team makes a LOT of money, but you can also get blown out and it's not a given that the PM chooses to share.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
 
Feb 12, 2015 - 11:24am

whalesquid123:

Kenny - do you have specific ranges for the risk/performance numbers needed to get a seat at places like these? For example Sharpe, min absolute return, max drawdown before you get closed out, etc

a) Not sure quite what you're getting at when you say "to get a seat." These platforms recruit PMs and then impose their risk limits/models on them (subject to negotation), not the other way around. Also Surveyor, to my knowledge, is almost all fundamental-driven so it's not like they're asking to see a backtest algo model or anything.

b) The specific risk management details, drawdown thresholds, etc are very proprietary so I don't have any info on that, but some platforms will negotiate with superstar PMs.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
 
Feb 17, 2015 - 1:45pm

Random: because of millenniums strict risk controls, you tend to see a 'millennium effect' where names that are heavily long millennium pod money will get their nuts ripped off when a stock tanks and everyone trys to get out of the same name at the same time. You see this happen in energy all the time as there are i want to say around 20 energy pods.

Disclaimer for the Kids: Any forward-looking statements are solely for informational purposes and cannot be taken as investment advice. Consult your moms before deciding where to invest.
 
Feb 17, 2015 - 5:26pm

Thanks, guys. Really appreciate the clarification on their model. "Millenium effect" is interesting.

To push a little further, though: how do they compare in performance and reputation against the likes of some of the older single-manager L/S shops out there like Lone Pine, Shumway, Viking, Maverick, etc?

I'm keying in on performance/reputation because I have a decent sense now of the Surveyor model and I'm trying to get a sense of optionality that a stint at a place like this buys me among L/S funds if I decide the fund/PM/style isn't for me in the long run. (As you can tell, I'm new to the industry.)

 
Feb 18, 2015 - 7:17am

BobertoPM:

Thanks, guys. Really appreciate the clarification on their model. "Millenium effect" is interesting.

To push a little further, though: how do they compare in performance and reputation against the likes of some of the older single-manager L/S shops out there like Lone Pine, Shumway, Viking, Maverick, etc?

I'm keying in on performance/reputation because I have a decent sense now of the Surveyor model and I'm trying to get a sense of optionality that a stint at a place like this buys me among L/S funds if I decide the fund/PM/style isn't for me in the long run. (As you can tell, I'm new to the industry.)

It's a pretty different gig due to the risk controls and focus on "as-measured" alpha; from what I've seen/heard/observed it can make the mind-set much shorter-term, more focused on short-term earnings, etc.

Performance is not apples-to-apples because of the structure. Millenium for example just cranks out 8-12% years very consistently but is structurally probably not going to ever have a year where they're up 25%.

This is entirely anecdotal/a small sample set but all the situations I'm familiar with are the other way-ie a seasoned analyst who's made a name for themselves but is bottlenecked at a single-manager fund and takes the opportunity to run their own risk (even in the confines of the platform's rules). This is for PMs and analysts they brought over with them though-not sure how this would apply to more junior analysts working for a pod.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
 
Feb 17, 2015 - 10:51pm

xqtrack:

Lone Pine, viking, maverick have better reps as places to be as an analyst. Not sure about shumway, probably less so. That being said, life in the HF world is so idiosyncratic that it's best not to get wrapped up in the WSO prestige wars.

Shumway is a family office now, very different experience.

 
Feb 25, 2015 - 1:40am

My understanding is while the various PMs on the Surveyor platform need to run market neutral, the individual sector exposures don't need to be (i.e Autos guy can be long OEMs, short Tier 1s etc.). So while the theory is to do a lot of 5% years running 5x+ levered, in practice risk can be taken at the PM level.

They have good analysts who tend to be smart on their sectors. But with 100+ names in the book, there isn't that much an analyst can do even if they gets things right (analogous to long only). Simply not the same portfolio concentration and ability to take on exposure as value mafia (think Baupost) or Tiger cub (you named some of the larger ones).

 
Feb 25, 2015 - 1:41am

Surveyor firing people...rip (Originally Posted: 02/18/2016)

From ZeroHedge:

Is Citadel Unwinding A $50 Billion Portfolio In The Aftermath Of The Surveyor Debacle

Citadel Google Ken Griffin Pure Alpha Volatility

Two weeks ago, before the market was shaken by the most recent bout of volatility, one which led to the dramatic outcome of Birdgewater's Pure Alpha suffering two consecutive 5% weekly losses as reported earlier, we received a tip from an insider that as a result of substantial losses at Citadel's internal hedge fund Surveyor, Ken Griffen's organization was not only laying off numerous portfolio managers and traders, but that the unwinds of the associated portfolios were a direct reason for the selloff suffered at the beginning of the month.

Without going into detail, we quizzed our readers the following on February 3:

Today, the WSJ has confirmed what we heard, when Rob Copeland wrote that Citadel "cut more than a dozen members of its investment staff this week in the wake of early losses for the firm in 2016." This is true, however, when adding all the other PMs and investment managers who have quit or left on their own in the past month, the number is far greater.

The WSJ continues:

The Chicago-based firm, led by billionaire Kenneth Griffin, parted ways with analysts, associates and portfolio managers in its multibillion dollar Surveyor Capital arm. Surveyor is one of Citadel’s three internal units that bet on and against stocks worldwide. Last month, the firm replaced the longtime head of Surveyor, Jon Venetos. The unit recently had about 200 employees, with a majority considered investment staff.
Further validating our information, the WSJ notes that "through the second week of February, Citadel’s main fund is down 6.5% this year, a person familiar with the matter said." As Copeland notes, "Mr. Griffin grapples with a money-losing stretch unusual for one of the hedge-fund world’s marquee names."Perhaps the HFTs are no longer profitable?

In any case, that is only part of the story.

Here is what the WSJ missed.

As our source reveals, Citadel is quietly trying to unwind the $50 billion leveraged Surveyor portfolio.

Following massive losses last year by a Boston-based trader Scott Carmel (who lost over $150 million from 2015 through January 2016 trading financial stocks, and was fired for performance last month), Ken Griffin, angered by the underperformance of Surveyor vs the core Global Equities book, ordered the dismissal of several teams. As the WSJ confirmed today, more employees have been fired since.

Not surprisingly, Carmel promptly scrubbed his LinkedIn profile to remove any trace of association with Citadel although it still remains in the google cache.

As the WSJ also reported today, the head of Surveyor - Jon Venetos was demoted and quickly quit, leaving the unit in disarray.

What the WSJ did not note is that "now there is a desperate scramble to try to unwind a massively leveraged equities portfolio (over $50 billion gross)."

Our source concludes that "Citadel investors do not know the truth of what is happening here. They are trying to maintain the illusion but there is chaos amongst employees."

Well, now Citadel investors are fully aware of what is happening there, even though Ken Griffen is doing his best to maintain the image that all is well by splurging $500 million on artwork by de Kooning and Jackson Pollock.

But what matters to our readers is whether or not Citadel's unwinding of this major portfolio has concluded, or still a work in progress. Because quietly liquidating $50 billion in securities in a market as illiquid and choppy as this one, would be certain to move it and not in an upward direction.

Source: http://www.zerohedge.com/news/2016-02-18/citadel-unwinding-50-billion-p…

Disclaimer for the Kids: Any forward-looking statements are solely for informational purposes and cannot be taken as investment advice. Consult your moms before deciding where to invest.
 
Feb 25, 2015 - 1:46am

Damn, I'm really happy i didn't get that offer a few months ago...

Guessing they will backfill new pods to replace the old teams. Seems like they are stepping up recruiting (once again) based on recent headhunter pings and bio hits on bloomberg. Not sure I could live with that lifestyle vol tho.

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