Ken Griffin’s Citadel is on monitor to defy a sluggish yr for commodities buying and selling throughout Wall Avenue, burnishing the hedge fund’s picture as a dominant drive within the asset class.
Citadel’s commodities enterprise generated about $4 billion of revenue this yr, pushed by pure fuel buying and selling, based on individuals accustomed to the matter. That places it on monitor to rival final yr’s efficiency.
The agency’s flagship Wellington fund gained about 13.2% this yr via November. A spokesperson for Citadel, which managed $65 billion as of Nov. 1, stated the agency doesn’t touch upon its efficiency.
Buying and selling income, significantly in power, have been muted throughout the trade as an prolonged interval of volatility following the pandemic and Russia’s invasion of Ukraine has begun to subside.
The slowdown is taking a toll on corporations equivalent to Glencore Plc and Gunvor Group, in addition to hedge fund boss Pierre Andurand, who ditched oil trades earlier this yr for bets on copper and cocoa.
The income at Citadel’s commodities unit prolong its constructive run. It generated greater than $4 billion final yr and roughly double that quantity in 2022.
The crude and gas buying and selling enterprise has encountered some challenges this yr, with the departure of portfolio supervisor and gas dealer Drew Beaver as that Houston-based workforce’s efficiency faltered. However robust positive factors in pure fuel buying and selling in Europe and North America ended up boosting income, the individuals stated, asking to not be recognized discussing non-public outcomes.
Citadel is uniquely positioned due to its service provider buying and selling group, Citadel Vitality Advertising. The unit, led by former Morgan Stanley commodities chief Jay Rubenstein, has been a key supply of income lately because it encompasses bodily buying and selling equivalent to storage and transportation. The enterprise additionally contains climate derivatives and modeling, which may be essential instruments for pure fuel buying and selling.
Citadel’s success in navigating bodily and monetary commodities markets has prompted a flurry of rivals to observe go well with. Balyasny Asset Administration and Jain World are among the many corporations constructing bodily companies to spice up buying and selling income.
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