| Kenneth Griffin, Citadel (Bloomberg) |
Kenneth Griffin’s Chicago-based Citadel posted another strong year in 2015 in its flagship multistrategy funds, as well as in most other funds it manages.
This made Griffin one of the best-performing hedge fund managers last year, when nearly half of all hedge funds lost money, according to Chicago-based data tracker Hedge Fund Research.
The firm generated a 14.3 percent gain in the Kensington and Wellington multistrategy funds, its largest, according to an investor in the funds.
Remarkably, that was actually the firm’s worst performance in the past five years, underscoring the kind of run Citadel has enjoyed over that period. Citadel now manages $25 billion. This is up from $23.4 billion a year ago and $16 billion at the start of 2014.
The strong gains of 2015 came in a year when the Standard & Poor’s 500 stock index either lost a bit or made a bit, depending on whether or not you include dividends reinvested.
Citadel’s market-neutral stock-trading strategy led the way, as its Citadel Global Equities Fund surged 17.2 percent. In addition, Citadel Tactical Trading rose 16 percent. The firm declined to comment on the results.
Citadel’s multistrategy funds concentrate on five broad asset classes: equities, commodities, global fixed income, credit and quantitative strategies.
All five strategies made money last year, led by equities. What’s more, all the sectors that the equities teams specialize in made money, including some of the most volatile last year: health care, utilities and energy. The funds even made money in August and September, when the markets were falling, according to a person who has seen the firm’s reports and data.
This feat essentially underscores Citadel’s long-short, market-neutral approach. There is virtually no beta in the strategy, according to this person.
Citadel is known for its detailed research. Late last year Griffin told CNBC his firm held 15,000 meetings with corporate managements in 2015. This was up from more than 12,000 the previous year. The firm employs some 650 investment professionals.
Citadel also made money in the volatile commodities markets, including all of the subsectors it trades. They include oil, natural gas, power, some metals and some agriculture markets, to name a few.
And although last year was a tough one for fixed-income traders, Citadel also made some money trading interest rates across Group of Seven currencies.
The firm also made money in credit, mostly playing convertibles, and in its quantitative strategy, although the risk allocations to these two assets classes are much smaller than to the other three.
Last year Griffin topped Alpha’s annual Rich List of top-earning hedge fund managers, making $1.3 billion in 2014.
