February 18, 2016 / 10:20 PM / 4 years ago

Hedge fund Citadel cut some staff at stock unit as losses grew -sources

BOSTON/NEW YORK, Feb 18 (Reuters) - Hedge fund Citadel laid off roughly a dozen people at one of its stock picking units after its main investment funds lost 6.5 percent in the first six weeks of the year as stock markets tumbled, three people familiar with the matter said.

Citadel, run by Kenneth Griffin, cut analysts, associates and portfolio managers at its Surveyor Capital arm in the last weeks, the sources said. Al Boston, the head trader, was among those let go, the sources said.

In January Citadel promoted Todd Barker, who had co-headed Citadel’s equity business in San Francisco, to head Surveyor, replacing Jon Venetos, the unit’s long-time chief.

The layoffs came as $24 billion Citadel’s main Kensington and Wellington funds suffered a sharp drop in returns only weeks after having ended 2015 with a 14 percent gain. The average hedge fund lost money last year.

Citadel declined to comment on the layoffs.

“Surveyor has been a very successful business for us and we are well positioned to take it into the future,” a Citadel spokeswoman said.

The Wall Street Journal first reported the layoffs.

Hedge funds are off again this year with the average fund performing only slightly better than the broader stock market.

Performance at Citadel’s main funds has declined steadily this year as the global stock market rout, fueled by fears about growth, falling commodity prices and direction of interest rates, intensified.

At the end of January Citadel’s main funds were off 1.8 percent. The losses widened to down 2.9 percent by early February and have expanded to down 6.5 percent, the sources said. Surveyor’s returns make up only part of the main funds’ performance which suggests that the unit’s losses, which are not broken out, were large.

Citadel’s rocky start to the year stands in stark contrast to recent strong gains which earned the firm Absolute Return’s “Management of the Year” 2015 award, an coveted accolade in the hedge fund community. Citadel beat out D.E. Shaw Group, PIMCO and Two Sigma for the top prize. It also won awards in the Global Equity firm with more than $500 million in assets category and in the multi-strategy firm category.

Surveyor is one of three stock businesses at Citadel and employs roughly 200 people.

Citadel was founded 26 years ago by Griffin who began trading as a student in his Harvard dormitory and has guided the Chicago-headquartered firm back from heavy losses of roughly 50 percent during the financial crisis.

Reporting by Svea Herbst-Bayliss; Editing by Lisa Shumaker

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