Color us surprised. Citadel has frozen withdrawals in their two largest funds until March (for starters).
Investors who asked to withdraw money at year end from Kensington and Wellington, with a combined $10 billion in assets, won’t be allowed to, the Chicago firm said in a letter on Friday. Otherwise, $1.2 billion would have come out, complicating Citadel’s attempt to resuscitate its performance following its hedge funds’ worst-ever year.
The move follows repeated assurances from Citadel that redemption requests wouldn’t pose a problem. The firm’s total assets have shrunk to about $13 billion from $20 billion at the start of the year. Mr. Griffin says in the letter that “in today’s highly volatile markets, maintaining financial flexibility must be a priority.” (Emphasis ours).
Well, I suppose the redemption requests did not actually pose a problem. For Citadel, that is.
Citadel Freezes Its Funds Through March [The Wall Street Journal]
0wned!
i thought they were invincible???
Put a fork in him: he’s done.
How’s that IPO thingy workin’ out for ya, Toastboy?
Ha ha ha ha ha ha ha ha
How To Make $13bn In The Stocks Market
by Ken Griffin
Start with $20bn
The End.
First!
“OMG they killed Kenny”
“You bastards!”
“Visionary organizations don’t chase the impossible; they focus on extending their reach to achieve the possible. We don’t let up in the face of challenge, and we don’t call it a day when an answer isn’t readily at hand. Relentless effort, relying on our teammates and colleagues, and remaining open to unconventional solutions are the keys to the Citadel approach.”
-Kenny G (not the musician)
I’ll throw down a challenge that needs an unconventional solution Kenny: Would it be possible to get that $1.2b by reducing your exposure?
2 weeks ago they said they had 7bn in excess cash, now they cant meet the 1.2bn redemption request, sounds like a collapse or maybe worse…is ken related to madoff?
By the way EP your fixed fortification thesis is retarded. You’re leaving out all of the attacks, skirmishes and wars that never took place because the fixed fornications acted as a sufficient deterrent.
Of course no strategy works perfectly but to suggest fortifications have no value is ludicrous. Its the classic “CIA Problem” the failures are easily remembered the success we never even know about.
That said the Gerbil is still a moron, and his original convertible arb model he stole in the first place.
No price is too high for fixed fornications
@7,
They’ve got plenty of cash, they just don’t want to give it back.
I think the problem is that the cash supplies are getting so low that if they allow redemption Ken will no longer be able to go for his daily money swim.
@8 – Two words for you: Maginot Line.
You might earn more respect from your comments if you refrained from throwing around insults.
“Retarded,” indeed.
@12:
and i need respect because…..?
Yes, the maginot line was a poor fortification. The fortifications around Byzantium were not. These examples neither prove nor disprove anything. Of course you can find examples of success or failure for any tactic. However, the most successful fortification is the one so imposing as to discourages the enemy from even contemplating attacking at all.
P.S. Fuckface.
Hey, I was just reading this interesting commentary by a registered financial advisor that his on cnbc and bloomberg alot http://thefinanceprofessor.com/welcome.php?article_id=78
Have others noted that J. Ezra Merkin was wiped out by Madoff scam. Merkin is the Chairman of GMAC, and deeply involved in Cerberus buyouts of Leumi bank and other deals. The 1.3 Billion in Merkin’s Ascot Partners LP is “gone” in his own words as substantially all of it was with Madoff.
Highpower Houston attorneys for Merkin’s coinvestors are studying litigation against Merkin. Merkin’s other funds and investments are obviously at risk for complete redemption and liquidation.
If Merkin goes down, Cerberus will be tugged along by the backwash as the 3 headed dog are co-investors in so many deals. The Madoff wealth destruction will take Chrysler out.
In the age of JDAMs and Bunker-Busters, you fail.
discourage
p.p.s. And as such the most successful fortifications are the ones which are least likely to be first to mind , since no major battles were fought there at all. Hadrian’s wall comes to mind.
@15, great point. Is there a master list of victims yet? EP should consider starting a thread where the list is expanded on. The news is going to be full of these events dribbling out for days and weeks.
The market most likely will have a sell mode in it, as people exit what is left of their market exposure after deducting Madoff lost exposure.
If you had 75% of your fund with Madoff, you can not allow your last 25% to be exposed to the market. Lots of formally wealthy people are going to have to cash out of the markets in the next few weeks.
Unrelated:
Why does Goldman Sachs Asset Management have the shittiest fund performance I’ve ever seen?
@19 because it’s just a place to dump all of the bad trades done in the partners’ investment vehicles.
Goldman IPO goes bad? Have the GSAM funds buy it above the offering price.
@20
True that. Same thing for PIA
@2, good point on the hedge fund IPOs. But there are more! FIG, OZM…they’re all looking real good. And who was one of the lead hedge fund bankers making millions in the process? Erin Callan, of course (who also coincidentally exercised her LEH options above 20 cents). Not that I believe in conspiracy theories…
http://deltahedged.com/
@3
hilarious
so the real question is whether they will continue to clip their management fee during the next three months on the 1.2 B which isn’t leaving?
Ford will do okay once GM and Chrysler go under. It won’t be pretty. Ford has been the least retarded of the three, and deserves to live.
Anybody beside Paulson making money in this market?
@24, also unlike most funds, Citadel charges all their expenses to their funds. So the investors left are getting hit with approximately twice the amount of expenses compared to a year ago.
http://confessionsofafirstyearanalyst.blogspot.com/
Don’t follow all you brainiacs who apparently went to War College.
I;m just hoping they pull a Masada.
@28…too long; didn’t read
I love the tag, EP.
Stefan Judisch
BIOGRAPHY
Mr. Judisch seems to have been demoted to the Chief Commercial Officer (Supply)(what?)) of RWE Supply & Trading GmbH, a wholly owned subsidiary of RWE AG. Founded in April 2008 as a merger of RWE Trading GmbH, the RWE Gas Midstream is the number six of about eight by volume in the European gas supply business, the company manages the RWE Group’s international energy procurement and wholesale energy trading activities. He once tried as a to work in banks but now finds utility business a better change for his suitability.
Fuld, still in denial…. the only “firm” he’s going to be associated with is the firmness protruding from his cell mate. Plus I thought he hated “fucking bankers”. Why doesn’t he use is sweet commercial paper trading kills and start a money market fund.
The Financial Times
Fuld weighs comeback with advisory boutique
By Francesco Guerrera
Dick Fuld, the former chief executive of Lehman Brothers, is planning a comeback and has told friends he might launch a small advisory firm to harness his contacts in US companies once the dust settles on Lehman’s bankruptcy.
People close to the situation said Mr Fuld’s plans were neither firm nor immediate because the legal and political fall-out from Lehman had still to play out.
http://www.ft.com/cms/s/0/5022fd98-c89a-11dd-b86f-000077b07658.html?nclick_check=1
Storm the Citadel!
Aux armes, citoyens,
Formez vos bataillons,
Marchons, marchons !
Qu’un sang impur
Abreuve nos sillons !
Perhaps we should say that fixed fortifications in the age of gunpowder are a monument to the stupidity of man.
lol @35
Axes flash, broadswords swing
Shining armors’ piercing ring
Horses run with polished shield
Fight those bastards ‘til they yield
Midnight mare, blood red roan
Fight to keep this land your own
Sound the horn and call the cry
How many of them can we make die?
Follow orders as you’re told
Make their yellow blood run cold
Fight until you die or drop
A force like ours is hard to stop
Close your mind to stress and pain
Fight ‘til you’re no longer sane
Let not one damn cur pass by
How many of them can we make die?
Guard your women and children well
Send these bastards back to Hell
We’ll teach them the ways of war
And they won’t come here anymore
Use your shield and use your head
Fight ‘til everyone is dead
Raise the flag up to the sky
How many of them can we make die?
What about Garrison Capital?
Fortress Investments?
Access International – 1,400 mil
Fairfield-Greenwich – 7,500 mil
Private [Merkin] – 1,800 mil
Santander Banque – 3,091 mil (US)
Lappin Charitable – 8,000 mil
Union Bancaire Privee – 844 mil (US)
Notz, Stucki & Cie – 928 mil (US)
Kingate Management – 2,800 mil
Yeshiva University – ???
I’d like to see Palm Beach Country Club file for bankruptcy. I’m looking for for a piece of oceanfront property that runs all the way to the ditch… everyone knows the real money in palm beach is at the glades club
Griffin = douche
guess the merkin co-investors were not as well covered as they thought …
JAMIE DIMON JUST BLEW A LOAD OF WARM, STICKY CUM ON KEN GRIFFIN’S FACE. KENNY BOY IS SWALLOWING THE LITTLE SEMEN THAT IS TRICKLING INTO HIS MOUTH FROM JAMIE DICK.
AFTER THIS DIMON IS GOING TO BEND KEN GRIFFIN OVER, LUBE HIS OWN DICK WITH KY-SELECT, AND THEN PROCEED TO THRUST DEEP INTO KEN GRIFFIN’S ASS THEREBY BUGGERING HIM.
FUUCK KEN GRIFFIN. HE’S TOAST.
JUST A MATTER OF DAYS BEFORE CITADEL BEGINS AN ORDERLY LIQUIDATIOON!
BOOYAH BOOYAH KAHSA… YAY YAY YAY!!!
@44
Fuck you.
Ivanka Trump
If merkin goes down my crotch will be bare
Citadel freezing redemptions? I can guarantee you that wealthy investors are smelling Ponzi everywhere and want to take their cash now.
GIMLI
Helm’s Deep! They flee to the mountains when they should stand and fight. Who will defend the LPs if not their Gerbil?
ARAGORN
He’s only doing what he thinks is best for his investors. Shorting volatility has saved Helm’s Deep in the past.
GANDALF
There is no way out of that ravine.
Griffin is walking into a trap. He thinks he’s leading them to safety. What they will get is a massacre. Griffin has a strong will but I fear for him.
Jimmy Cayne needs to start a fund.
I’d invest.
He’s probably great at bridge financing.
I would be hiring a few armed bodyguards right about now, if I was Ken.
Who audits Citadel? Firm name?
@49
Awesome.
@ 51, lets hope it was not Friehling & Horowitz…
@53…agreed. But who does audit Citadel.
@54
PricewaterhouseCoopers
@55
Who were worldcom’s auditors? Seems to me auditors do as they’re told.
@56
Arthur Andersen LLP (RIP)
Somehow, the market is going to be up tomorrow.
I guess its true, monkeys do pick stocks better than professionals.
@58 Wouldn’t be surprised at all if that happens. Treasury yields near zero and equities meandering higher. Truly a bizzaro world.
While I don’t necessarily agree, but is it a surprise that Auditors don’t always find the problems until after its too late, especially when there is an intent to deceive, which is when they’re needed most?
Those perpetrating the crimes often know the business better than the auditors, know the firm better, blah blah yadda yadda…
The mortgage and consumer credit giants, Fannie Mae and Freddie Mac, were given enormous stimulus packages a couple months ago in order for them to stay afloat during the hard hits of the recession. In Washington DC on Tuesday, December 9th, the mortgage firms were subject to a hearing by the House Oversight Committee where they were grilled by Congress over their corporate strategies that led to the near destruction of their companies. What had apparently happened was that the leadership of those companies had invested in mortgage backing for their cash flow. So they basically bought other people’s debt, thinking that it meant instant cash flow, especially when they raised the interest rates on the mortgages that they purchased. Borrowers who had borrowed money from irresponsible lenders started defaulting on their loans, thus, the companies that had bought their debt began to stagger towards the brink. House Oversight Committee Chairman Henry Waxman called their action irresponsible, especially after senior risk managers had questioned the call to make and invest in such loans. This shocking incident emphasizes the importance of being extremely responsible with your finances. Budget properly, practice smart spending habits, save money, and don’t put money into anything that looks too good to be true. If you need some help with a sudden emergency expense, payday loans are available at a reasonable rate to keep your finances above water until your next payday. Click to read more on Fast Payday Loans.
Redemptions are 12% of AUM, their cash position is 25-30%, so what is the justification for gating? Evidently they don’t have the excuse of shielding remaining fund investors from fire-selling assets at bargain-basement levels…all redemptions can be met with cash
@46 – Don’t worry, at least I got it.
61 Yes, in cases where the fraud is complex. Here two very simple rules were violated: the person investing the money shouldn’t be responsible for 1) holding the assets 2) measuring performance. The fact that there was no independent trustee (holding the assets and measuring performance) was enough for some to walk. A lot of others were apparently charmed by a personal relationship or some felt kinship as a result of being fellow alta kockers.
Amen, #63. I don’t understand this action…how can any fund manager not be prepared for 10%ish type redemptions? There are three scenarios which make me think that something is rotten in Denmark (or Chicago in this case). 1. Kenny G needs to suspend redemptions in order to not trip covenants with his Prime Brokers or derivative counterparties who would have the right to unwind (descend like vultures) if his NAV (withdrawals PLUS percentage decline) was greater than say 50%, which is right about where it would be now on a gross basis (fees charged to investors make the net worse than this gross, most people estimate that Citadel’s historical fee level was around 7-8%). 2. Same theory, but applied to their public debt 3. The nefarious one–HIS MARKS ARE WRONG! Even though he can pay his redemptions out of cash, doing so would make the cash cushion so small that if he were to actually mark his positions properly at year-end, he’d be toast.
The more I think about it, the more I think it’s likely: Kensington and Wellington are gone. Game over, Ken. No joke.
The auto industry will be viable by March. Maybe this will all blow over by then.