Ken Griffin's Citadel has sprouted a sprawling alumni network of hedge funds- showing the power of the $30 billion brand with day-one investors
- Billionaire Citadel founder Ken Griffin has built one of the most well-known brands in hedge-fund history, and those who have worked for him have benefitted.
- A Business Insider review has found dozens of funds started by an alum of Citadel or connected to Griffin in some way.
- While Griffin isn't in the business of seeding top producers in the way Tiger Management founder Julian Robertson or George Soros were, Citadel's pod structure gives portfolio managers the chance to run a team.
- In recent years, when new hedge funds have struggled to launch, some of the biggest start-ups have come from Citadel, including Woodline Capital, Cinctive Capital, and Candlestick Capital.
- "Great firms drop the seeds of future success stories," Griffin said at an Economic Club of New York event in February.
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Ken Griffin modeled Citadel after Goldman Sachs' old-school analyst program. And, just like Goldman, when employees leave Citadel, they have a leg up in the industry.
While Tiger Management founder Julian Robertson remains the gold standard for hedge-fund networks, the hedge funds with connections to Griffin's Citadel are growing in both number and prominence.
A review of LinkedIn, past media, and industry sources led Business Insider to pull together a list of roughly 80 funds that were founded by someone who worked at Citadel or by someone who worked at a fund run by a Citadel alum. The research showed that roughly an eighth of the funds on the list are running more than $1 billion.
Well-known funds like Alec Litowitz's Magnetar Capital and Anand Parekh's Alyeska Investment Management highlight the generation of Citadel alums to first come about. Recently, some of the industry's biggest launches have been former Citadel heavy-hitters like Jack Woodruff's Candlestick Capital, Brandon Haley's Holocene Advisors, and Mike Rockefeller and Karl Kroeker's Woodline Capital.
While Cinctive Capital's founders are best known for their old fund Diamondback, Richard Schimel also led Citadel's now-shuttered Aptigon unit for a couple years.
This year, we have already reported on Prashanth Jayaram, a former healthcare portfolio manager who worked at Citadel and Tiger Cub Maverick Capital, who is launching his fund Tri Locum Partners.
A majority of the list has launched since the financial crisis, when Citadel lost $8 billion in assets and was in danger of closing (Griffin told The Wall Street Journal in 2015 that it took the firm three years and 17 days to earn back the losses).
Since then, the firm has added billions in assets, built out new teams and businesses, and cemented its status as one of the marquee names in the hedge fund industry with $30 billion in AUM. The firm's flagship Wellington fund has an annualized return of 18.7% since its launch nearly 30 years ago, and there are 950 investment professionals on more than 100 teams for the Chicago-based firm.
"Citadel has always focused on attracting and developing the world's top investment talent, and making significant investments in tools and resources to provide them with a platform where they will be most successful. Over the years, a handful of our successful portfolio managers have leveraged what they honed at the firm and decided to launch their own firm," the firm said in a statement provided to Business Insider.
Unlike Tiger, where many of the hedge funds launched by Robertson's disciples traded like him, Citadel's multi-strategy structure means spin-offs invest across the board.
Jonathan Graham's Aquatic Capital Management is a quant fund, while Renee Yao's Neo Ivy Capital uses machine-learning to trade equities globally (Yao did not manage money for Citadel during her time there). Matthew Smith, who was included on Sohn's rising stars list, founded his energy-focused hedge fund Deep Basin Capital in 2015 after working as an energy PM for Griffin.
The list of names includes people that made it to the highest ranks of Citadel as well as though who were only analysts before jumping to another fund or deciding to try and launch their own with limited experience. Michael Cowley founded Sandbar Asset Management in London after working as a portfolio manager for Izzy Englander's Millennium but was also an analyst at Citadel in the mid-2000s. Rushin Shah was at Citadel for less than two years before he founded Nine27 Capital Management at the beginning of this year.
Roughly half of the list of alums were portfolio managers or heads of businesses at Citadel before launching their own fund, while the other half were analysts, researchers, and developers who often went to another hedge fund before setting out on their own.
Not all alums have left in good standing. Citadel sued Misha Malyshev roughly a decade ago for stealing the firm's IP to start his own high-frequency trading firm, Teza Technologies, and a court fined Malyshev $1.1 million.
At one point, Citadel ran a seeding platform, known as PioneerPath that managers like Clint Murray's Lodge Hill Capital and Todd Cantor's Encompass Capital came from. But it was short-lived, lasting roughly two years from 2008 t0 2010, before becoming a part of Surveyor, one of Citadel's three equities businesses.
Griffin himself is not in the business of backing many launches either. Most of his personal money is invested in Citadel funds, though he did back Woodruff last year. Citadel, as a firm, has no money invested in outside hedge funds either.
Talking at an Economic Club of New York event last month, Griffin said he was proud of the fact so many people from Citadel are running their own shops. While the 30-year-old hedge fund always wants to keep its top talent, Griffin is proud people can "stand on their own two feet" after leaving Citadel.
"Great firms drop the seeds of future success stories," he said in a conversation with Goldman Sachs President John Waldron.