Citadel Investment Group

From Wikipedia, the free encyclopedia

Citadel Investment Group is an $20 billion[citation needed] hedge fund management firm based in Chicago, Illinois, founded by billionaire trader Kenneth C. Griffin. The firm is one of the world's largest hedge fund managers. The firm's daily trading volume amounts to approximately 3% of average daily trading activity in London, New York and Tokyo.[1] The fund requires longer "lock-up" periods from investors than many other hedge funds. Though Citadel employs over 1,200 individuals globally, its flagship operation is located in Citadel Center, a $355 million office tower in downtown Chicago (in 2006 the tower was purchased for $560 million by Robert Gans) [2] [3]. Citadel also has offices in New York, Tokyo, Hong Kong, San Francisco, and London [4]. Of the 100 largest hedge funds, only Citadel is based in Chicago [5]. Citadel is the eleventh largest hedge fund in the world [5]; it is also the second largest multi-strategy hedge fund in the world [6]. The fund has become infamous for having one of the largest personnel turnovers in the financial industry (50% in 2005), gaining the nickname of "Chicago's revolving door". [1]

Despite prior talk in Wall Street that Citadel was considering an IPO and Kenneth C. Griffin mentioning that possibility in an interview, in April 2006 a spokesman for Citadel said the firm currently has no such plans [7]. However, in November 2006 Citadel became the first hedge fund to issue bonds. In a bond offering led by Lehman Brothers and Goldman Sachs, Citadel announced it would sell $2 billion worth of notes. [8] The bonds have been given an investment-grade rating by Standard & Poor's. [9].

Contents

[edit] Investments

In 2004, Citadel founded CIG Re, a Bermuda-based catastrophe reinsurer [10]. In 2005, the hedge fund founded a $500 million catastrophe reinsurer in Bermuda called New Castle Re [11].

Citadel also has multiple subsidiaries such as Kensington Global Strategies (Citadel's largest fund [12]), Wellington Partners [13] (Citadel's oldest fund and its flagship fund [14]), Citadel Equity Fund [15], Citadel Finance [1], and Citadel Derivatives Group, which controls 10% of the Philadelphia Stock Exchange [2]. In 2000, Citadel's Wellington affiliate achieved a 52.6% return [3]. Since January 2005, Citadel Derivatives Group has been a Lead Market Maker on the trading floor of the Pacific Coast Exchange [4]. In a strategic partnership with about ten other financial institutions, Citadel Derivatives Group is also a joint owner of the International Securities Exchange [5].

In 2006, Citadel and JP Morgan Chase acquired the energy porfolio of failed hedge fund Amaranth Advisors, which had suffered a 65% ($6 billion) loss in assets [6] [7].

In 2007, Citadel acquired a sizable stake in online brokerage E*TRADE [8].

Citadel's daily trading activity reportedly accounts for "more than 10% of daily U.S. listed equity options contract volume" [9].

[edit] Other information

Citadel Investment Group is not related to any of the following organisations:

[edit] See also

[edit] Notes

  1. ^ a b Fortune. "A hedge fund superstar", CNN, 2007 April 3. Retrieved on 2007-12-07. 
  2. ^ Carr, Robert. "Citadel Center Trades in $560M Transaction", globest, 2006 October 27. Retrieved on 2006-01-27. 
  3. ^ "Dearborn Center Announces 206,146 Square Foot Lease with Citadel", Beitler RE Corp, 2001 March 9. Retrieved on 2006-01-27. 
  4. ^ "Harbin Electric Closes $50.0 Million Financing", Harbin Electric, 2006 August 31. Retrieved on 2006-01-27. 
  5. ^ a b Rose-Smith, Imogen. "Land of the Giants", Alpha magazine, 2006 2006, pp. 3. Retrieved on 2008-03-20 (dead link). 
  6. ^ Hutchins, william. "Citadel leads the way in financial self-sufficiency", Financial Times, 2006 December 8. Retrieved on 2006-01-27. 
  7. ^ Reuters. "Citadel Investments to stay private", Crain's, 2005 April 29. Retrieved on 2006-01-27. 
  8. ^ Reuters. "Citadel to sell up to $2 billion in debt", Crain's, 2006 November 28. Retrieved on 2006-01-27. 
  9. ^ Anderson, Jenny. "INSIDER; Some Hedge Funds Decide That Relying on Banks Is Just Too Risky", The New York Times, 2006 December 1. Retrieved on 2006-01-27. 
  10. ^ Zuill, Lilla. "Hedge fund investments in reinsurance broaden", The Royal Gazette, 2005 August 22. Retrieved on 2006-01-28. 
  11. ^ finanzanch. "Citadel forms catastrophe reinsurer New Castle Re - AM Best", AFX & marketwatch, 2005 April 11. Retrieved on 2006-01-28. 
  12. ^ Toomre, Lars. "Citadel Investment Group Off to Flying 2006 Start", Toomre Capital, 2006 March 13. Retrieved on 2006-01-28. 
  13. ^ Mannes, George. "Citadel Storms Into Google", thestreet.com, 2004 November 15. Retrieved on 2006-01-27. 
  14. ^ Maday, Tom. "Meet Ken Griffin", Cover Story, Institutonal Investor, 2001 September. Retrieved on 2006-01-28. 
  15. ^ Morgan Lewis (2004 October 14). "Court halts investor squeeze out by DEPFA Deutsche Pfandbriefbank AG". Press release. Retrieved on 2006-01-28.

[edit] External links