| Kenneth Griffin, Citadel (Bloomberg) |
After putting together a string of five very strong years, Kenneth Griffin’s Citadel multistrategy funds are off to a rough start this year.
Citadel’s Kensington and Wellington funds were off by 6.9 percent each in the first quarter. Most of the losses came from their equity book.
Chicago-based Citadel’s loss comes amid a mixed quarter for multistrategy funds generally. Several other funds have also posted losses. For example, Eric Mindich’s flagship Eton Park Fund, managed by New York-based Eton Park Capital Management, was down several percentage points in the first quarter, according to knowledgeable sources.
Israel “Izzy” Englander’s New York–based Millennium International was down 4.2 percent for the period. New York-based Millennium Management has about 195 different trading teams managing the firm’s assets across these broad strategies: relative value, fundamental equity, statistical arbitrage/quantitative strategies, merger arbitrage/event driven, fixed income and commodities.
We earlier reported that OZ Master Fund, managed by Och-Ziff Capital Management Group, rose 0.83 percent in March but was down 3.36 percent for the quarter.
However, others have fared much better so far this year. For example, New York–based Highbridge Capital Management and QVT Offshore were only slightly in the red, losing less than 1 percent.
Several multistrategy funds were in the black for the three-month period.
S. Donald Sussman’s Paloma International, managed by Greenwich, Connecticut-based Paloma Partners, was up about 1.2 percent for the period. Unlike many other multistrat funds, Paloma’s does not devote a lot of its assets to long-short equities. Rather, the fund has a heavy concentration on algorithmic quantitative strategies.
Elliott Management Corp.’s two funds were also said to be in the black for the period, although it is not known exactly by how much. The firm invests in a wide variety of assets, including credit and activist/special situations.
The first quarter was very difficult for stock investors. Global equity markets tanked in the first week of the year and by mid-February seemed well on their way to the first bear market since the 2008 financial crisis. However, stocks then abruptly changed direction.
In February, Citadel announced it was planning to lay off more than a dozen members of the investment team that works for its Surveyor Capital arm. In January, Todd Barker, former co-head of global equities at Citadel, replaced Jon Venetos as head of Surveyor Capital.
While Citadel may be lagging its multistrat peers in the first three months of the year, keep in mind that over the past five years, it has outperformed its competitors. In that period Citadel racked up double-digit gains in each of the previous five years, with last year’s 14.3 percent gain being the worst.
Citadel’s multistrat funds are said to be up somewhat in April.
Millennium came close to Citadel’s success, racking up low teens gains in each of the three previous years.
Eton Park’s multistrat, meanwhile, was up somewhere in the mid-single-digit range in each of the two previous years after gaining 22 percent in 2013 and 13 percent in 2012.
Paloma rose 11.1 percent last year.
Highbridge, however, has posted only single-digit gains in each of the four previous years, after suffering a loss in 2011.
