New York (HedgeCo.Net) – Misha Malyshev, a trader for Citadel Investment Group who headed two of the firm’s hedge funds, has resigned according to a report by Bloomberg News.

Malyshev seemingly had a successful run with Citadel, working for the firm for 6 years and helping the two hedge funds post returns of about 40 percent last year.  The hedge funds are estimated to manage about $2 billion in capital.

Malyshev used “high-frequency” trading, which is a computer-dependent strategy that aims to exploit hidden behavior trends in the market, to run the funds.  As opposed to real-time data analysis, high-frequency trading uses tick data to uncover information and trends that may be invisible to the average analyst.  Complex algorithms and PhD’s are usually standard with this method of trading.

According to the report, Malyshev will take some time off and is unlikely to start working for another fund within the next 18 months, because of contractual obligations.

Citadel, which is run by Kenneth Griffin, seems to be on the up and up this year after a disappointing 2008.  Griffin has informed investors that they will be able to make withdrawals from the firm’s biggest funds, Kensington and Wellington.  The two funds were frozen last year after losing over half of their value.

Julie Scuderi
Senior Editor for HedgeCo.Net
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CNN Money – Citadel Investment Group’s main hedge fund lost 53% for 2008, according to a person familiar with Citadel’s preliminary estimates.

The $10 billion Kensington and Wellington funds lost about 9% during the first 24 days of December, punctuating the toughest year yet for Citadel founder Ken Griffin. That came after a 13% loss in November. In 2007, the fund was up 30%.

A bright spot this year was Citadel’s $3 billion market-making family of funds, which ended 2008 up about 43%, according to preliminary estimates.

Citadel has weathered the downturn better than some fund managers thanks to its financial flexibility and its size, at a time when the industry is contracting and many smaller funds are forced to close down.

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Tags: citadel-investment-group, cnn, cnn money, downturn, estimates, financial flexibility, fund-managers, ken griffin, kensington, wellington