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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 Email: julie@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.
Post Chronicle – The SEC’s inability to uncover the scandal until Madoff’s sons went to authorities last week comes at a particularly bad time for the SEC and its Chairman, Christopher Cox. They have already been accused by some lawmakers and market experts of being asleep at the wheel while the credit crisis exploded on Wall Street.
The agency’s future existence as a separate agency is already under threat as Washington looks at overhauling the regulation of the financial services industry.
"This will be profoundly embarrassing for the SEC," said Columbia University law school professor John Coffee, who has been critical of the agency for failing to properly regulate the failed investments banks. "Congress will predictably give them little mercy."
BusinessWeek – For the first time in 76 years, a financial crisis is occurring at the same time as a Presidential election. Based on recent polls, the coincidence seems to have boosted the chances that Illinois Senator Byearack Obama, the Democratic nominee, will defeat Republican Arizona Senator John McCain on Nov. 4.
The financial crisis has affected the Presidential race, but how is the election affecting the financial markets? Pundits offer endless theories on that question, and their answers are often suspiciously similar to their political views.
Thus, right-leaning market experts insist Obama’s tax proposals would be disastrous for investors. More liberal Obama supporters insist the market will celebrate if he is given the job of leading the world out of the financial crisis.
