(Bloomberg) -- Your pain is Ken Griffin's gain.
At a time when hedge funds are struggling to lure assets and beat benchmarks, the billionaire founder of Citadel continues to pounce on opportunities. This week, Griffin hired a quant team from Hutchin Hill Capital less than three months after its founder Neil Chriss said he was closing his hedge fund.
Griffin, who started Citadel in 1990, has a history of seizing the moment when others are in distress. He's hired teams or took on assets from hedge funds such as Visium Asset Management and Sowood Capital Management after they imploded, and also made a push into investment banking after the 2008 financial crisis. Almost two decades ago, he started fixed-income arbitrage trading after hedge fund Long-Term Capital Management lost billions on such trades and was bailed out.
“Ken has been scaling up and grabbing a lot of market share from rivals, but if markets turn this year like they did in 2008, it remains to be seen if he can can sustain his ship,” said Vidak Radonjic, founder of Beryl Consulting Group, which advises family offices on hedge-fund investing.
Not all of Griffin's moves into troubled waters have worked out. On Thursday he replaced Richard Schimel, who joined Citadel less than two years ago, with Eric Felder to run a stock unit called Aptigon. It was formed in 2016 to hire money managers for stock trading as the hedge fund industry lost assets, forcing some firms to close. In 2011, Griffin shelved his investment banking effort amid turnover in the executive ranks.
Citadel Expands
Griffin has been expanding Citadel on a number of fronts. Last month, he promoted Matt Simon, a 14-year veteran of the hedge fund, to run a new equities unit, Ashler Capital, adding to three others that Citadel runs. The firm has also expanded its Aptigon stock unit by hiring money managers such as Porter Collins and Vincent Daniel. Citadel brought on Colin Lancaster from Balyasny Asset Management last year to build a macro unit in London.
The 10-person group from Hutchin Hill joined $27 billion Citadel in New York and is led by Michael Urias, according to Citadel spokesman Zia Ahmed. Previously part of Hutchin Hill's QuantOne team, the group now trades for Citadel's main funds.
Hutchin Hill's Chriss told investors in November that he was liquidating his firm after failed credit and equity bets led to three years of lagging performance. A few months before shuttering, Chriss told clients that he'd decided to revamp the quant business, which had been detracting from returns. The quant strategy lost 0.8 percent in the first eight months of 2017, according to a document seen by Bloomberg.
Citadel's main multistrategy funds gained 3 percent last month after returning about 13 percent last year. The hedge fund industry on average returned 2.7 percent in January and 6.7 percent in 2017, according to Hedge Fund Research.
--With assistance from Hema Parmar Katia Porzecanski and Nishant Kumar
To contact the reporters on this story: Saijel Kishan in New York at skishan@bloomberg.net, Nico Grant in New York at ngrant20@bloomberg.net, Katherine Burton in New York at kburton@bloomberg.net.
To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Vincent Bielski
©2018 Bloomberg L.P.
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