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naraburns  nihil supernum  1yr ago (text post)   31763 thread views

Culture War Roundup for the week of January 2, 2023

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I’ve been thinking about where to post this because it only has some culture war connection.

Citadel posted +38% in their main hedge fund this year. They do better in Citadel securities which is HFT. This isn’t a huge finance sub. But in my opinion this is the greatest hedge fund performance I’ve ever seen. Their hedge fund business is what’s called a multi-manager with various pods getting capital allocated to them. Their sales pitch to investors is they average out all these managers (and fire losers quick who don’t make money) and run tight risks management. Other players in the space are Millenium, Balyasny, Schonfield, Point 72 (cohen Mets owner). These firms are suppose to never have down years. 6-10% after fee returns are fine because no down years. A big year I’ve seen before was high teens.

For non-finance people some firms do have higher return years. Old macro guys have had huge years. But they also take big concentrated bets and have big losses. Rentech has better returns but they’ve been capital constrained (past $4 billion not sure now) and closed to new investors for decades. Close to 40% return at large Aum (50 billion) and tight risks management seems very impressive.

Culture war wise Griffin moved firm HQ to Miami and is a big Desantis backer. And the Amc/Gme crowd calls him a market manipulator etc which I believe is false.

Citadel by marketing material doesn’t take those risks. All factor neutral.

My theory is there’s been a lot of dumb retail flow to profit from for stat arb, but their still outperforming competitors by a lot.

My theories are

  1. AI breakthrough they employed

  2. Was up a lot early and reduced risks controls

I can tell this isn’t mostly finance but tech autistics because no one is getting that their the firm with tightest risks management (point 72 suppose to be a lot looser on market bets).

Citadel by marketing material doesn’t take those risks. All factor neutral.

Many funds that failed in catastrophic ways made similar claims.

See say https://en.wikipedia.org/wiki/Long-Term_Capital_Management - to say nothing about repeated outright scams claiming the same

Ltcm took risks they said they were taking. That’s my point on post Citadel says not taking risks but returns say they did something.

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