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New York (HedgeCo.Net) – Chicago-based Citadel Investment Group has frozen redemptions from its two largest hedge funds after investors moved to withdraw $1.2 billion, according to a letter sent to clients on Friday.
The letter, signed by CEO Kenneth Griffin, informed investors that withdraws in the Kensington and Wellington Funds may resume as early as March 31st. The funds, which manage about $10 billion making them the firms largest, have lost 49.5 percent of their value this year through December 5th.
“We have not made this decision lightly,” Griffin said. “We recognize how a suspension impacts our investors, especially those with current financial obligations of their own to meet.”
The letter also stated that Citadel will absorb a large portion of the funds’ expenses, something that clients usually are responsible for, in the range of 3 to 4 percent of assets.
While Citadel’s two largest funds may be struggling to get through the year, three other funds in the Citadel family which manage about $3 billion, have climbed 40 percent this year.
This marks only the second year since the firm’s launch in 1990 that Citadel will report a loss. The only other loss was posted in 1994, at 4 percent. Hedge funds as a whole have had posted one of the worst years to date, losing 18 percent on average, according to data compiled by Chicago-based Hedge Fund Research.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) – Chicago-based Citadel Investment Group lost 13 percent in November, according to a report published by the Wall Street Journal. This brings the hedge fund firm’s total losses to 47 percent for the year.
The losses stem in part from the company’s two largest funds, the Kensington and Wellington, which together manage about $10 billion in assets. Investor redemption requests totaling around $1 billion and plummeting values of bonds were the catalysts behind the losses.
This is the first year since 1994 that Citadel will post a loss. It is only their second loss since CEO Kenneth Griffin launched the firm in 1990. All is not grim, however. Bloomberg News reports that three other Citadel funds, who together manage about $3 billion, have climbed about 40 percent this year.
Hedge funds as a whole have posted their worst record to date this year. According to data by Chicago-based Hedge Fund Research, hedge funds have lost an average of 22 percent this year.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) – Citadel Investment Group announced yesterday it will shut down its $1 billion fund of hedge funds portfolio and use the capital to invest in other businesses.
The Fusion fund was launched a year and a half ago, with nearly 95 percent of the capital coming entirely from Citadel. The money will be used to invest in businesses that finance new asset managers. The remaining 5 percent of capital will be returned to investors.
"We have seen strong interest in the incubation and seeding strategies that we’ve developed," Katie Spring, spokeswoman for Citadel told Bloomberg News. "We believe these will be important components of expanding investment talent over the years to come.”
This move comes after months of swirling rumors that the $18 billion firm, headed by Kenneth Griffin, may not be able to weather this year’s credit crisis. Citadel’s largest fund, the $10 billion Kensington Global Strategies, has fallen 30 percent this year stemming from losses tied to convertible bonds.
Seeding has seen a spike in popularity in recent years. It involves focusing on new and emerging funds and fund managers in hopes of someday partaking in profit sharing once the fund experiences success. Seeding is something that new hedge funds generally seek out if start-up capital isn’t readily available, to help get their fund off the ground. New hedge funds may receive anywhere from half a million dollars to several hundred million dollars.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
CNBC – Ongoing hedge fund losses and liquidations spooked markets Wednesday, and some of the biggest names in the mix now are Citadel Investments and Highland.
Hedge funds had their worst month ever in September, with average losses of 6.2 percent, according to an estimate by TrimTabs Investment Research.
All major categories of funds chalked up losses over the month, but emerging markets, long equity funds and distressed strategies had the worst results. The declines came as investors withdrew $43 billion from hedge funds—almost seven times the previous monthly record for redemptions, TrimTabs said.
Citadel confirmed to CNBC that its flagship Kensington and Wellington funds, which hold around $15 billion in assets, are down between 26 percent and 30 percent so far this year.
