http://www.bloomberg.com/apps/news?pid=20601087&sid=aon5iPboyGaU&refer=home Citadel Funds Lose 13% in November, 47% This Year By Saijel Kishan and Katherine Burton Dec. 4 (Bloomberg) -- Citadel Investment Group LLC, the Chicago-based hedge-fund firm run by Kenneth Griffin, lost 13 percent in November, bringing the decline for the year to 47 percent, according to two people familiar with the matter. Losses at the Citadelâs two biggest funds came from investments in convertible bonds, high-yield bonds and bank loans, and investment-grade bonds, which were hedged with credit default swaps that protect the buyer in the event of a default. These same wagers started the fundsâ tumble in mid-September. âDigging out of this hole may be tough for them,â given the lack of trading in the credit markets, said Michael Rosen, principal at Santa Monica, California-based Angeles Investment Advisors LLC, which advises clients on hedge-fund investments. The Kensington and Wellington funds, which together manage $10 billion in assets, have received requests from investors who want to withdraw about $1 billion by the end of the year, said the people, who asked not to be identified because the information is private. Griffin, 40, had posted just one losing year since starting the firm in 1990, dropping 4 percent in 1994. Katie Spring, a spokeswoman for Citadel, declined to comment on the returns, which were reported earlier today by the Wall Street Journal on its Web site. The hedge-fund industry has posted its worst performance on record this year, with average losses of about 22 percent this year through November, according to data compiled by Chicago- based Hedge Fund Research Inc. The Citadel funds have made money in stocks and on so-called macro trades -- wagers on stock indexes, bonds, commodities and currencies based on macroeconomic trends. Three other Citadel funds, whose returns are tied to the firmâs market-making business, have climbed about 40 percent this year. Those funds manage about $3 billion. Even with Citadelâs drop in assets, the firm has not breached the terms of its contracts with lenders, one of the people said. To contact the reporters on this story: Saijel Kishan in New York at skishan@bloomberg.net; Katherine Burton in New York at kburton@bloomberg.net
I bet a friend of mine 100 bucks yesterday before I saw this news that they would be finished within a year. They wont survive
Losing 47% means that they need to make around 100% to hit high water mark to start earning again. It will be really hard to do, but Griffin could find a way, who knows.
With SAC and CITADEL posting big losses, I'm wondering how to short the avante garde arts scene. These two guys were the largest buyers of useless "piss-in-a-pot" type art. Exhibit A : damon hirst : "gold plated shit in eunchs piss" will now appear on the market at a 95% discount.
thanks for the link Maverick the moral of this story may be to stick to what you are good at. Please correct me if i am wrong, but I believe the market making business was how Ken built Citadel
http://en.wikipedia.org/wiki/Kenneth_C._Griffin claims during his Harvard time when he received his first investor funds, he was originally investing in convertible bonds. So he does today what he started out with; the same exact type of investments that's killing him today. It seems his market making strategies were an add-on that came later. A victim of Hubris? He sounds like he was full of it. Markets can be humbling. A victim of size of funds under management? Definitely. Taking on $30 billion and promising investors uncorrelated returns with quarterly liquidity for everyone is simply a scam unless you just stick with major currencies and all but the most liquid futures, but not corporate bonds and convertibles.
Maybe, but perhaps great "marketing", done of course in a bull market, was the real reason for the success. Another case of bull market genius. S&P is down wat 50% and their funds lose 50%......