- Surveyor stock unit accounted for three-fourths of losses
- Other multimanager funds hurt by February market volatility
Ken Griffin’s Citadel posted declines of 8 percent in its main hedge funds this year through March 11, as the $25 billion firm lost money in a unit that has helped drive profits in recent years, according to people familiar with the firm’s performance.
The Surveyor arm, which trades equities across 29 teams, accounted for about three-quarters of Citadel’s losses during the first two months of the year, said one of the people.
Citadel’s early 2016 woes echo those at some other prominent multimanager funds, which typically farm out cash to dozens of individual teams, stay market neutral and are quick to cut losses. Senfina, the multimanager fund run by Blackstone Group LP, slid 17 percent last month, erasing much of its 2015 gain, Hedge Fund Alert reported last week. Izzy Englander’s $34 billion Millennium Management fell 2.7 percent in February, its third-worst month ever, according to people briefed on the matter.
Years of growth and top returns have built these firms into some of the biggest in the industry. Since the financial crisis, Citadel’s assets have more than doubled as the firm posted gains of more than 10 percent each year. Millennium pulled in $3.8 billion in 2015, or almost one-tenth of the net inflows coming into all hedge funds.
Investors say multimanager firms, some of which held similar positions, were hit hard at the start of the year because their tight risk controls forced them to sell at the same time, further driving down prices.
“Some managers were liquidating sizable portfolios in a short period of time into a market with challenging liquidity characteristics,” said Adam Blitz, chief investment officer at Evanston Capital Management. The sales were significant, he said, given the amount of leverage many of the firm firms use to amplify returns.
Surveyor head Jon Venetos left Citadel in January after 10 years. His replacement, Todd Barker, who has been at the firm for 12 years, cut about 15 investment professionals from the unit the following month. Surveyor, formed in 2009, has about 200 employees.
Katie Spring, a spokeswoman for the firm, declined to comment on performance.