H.L. Mencken famously said, “no one ever went broke underestimating the intelligence of the American public.” But Citigroup’s hedge fund and private equity business seems intent on proving the great skeptic wrong.
An awful lot has gone wrong at C in recent years, so maybe the woes of Citi Alternative Investments have passed by your notice. Allow us to recap: Seeking a potential successor to CEO Chuck Prince, Citi ponies up $800 million to buy Old Lane Partners in April 2007, founded by former Morgan Stanley exec. Vikram Pandit, who is named head of Citi AI. Citi quickly guts its existing flagship hedge fund, Tribeca Global Management, to accommodate Pandit. On the one hand, this worked out, because Pandit was running the show at Citi by the end of 2007. On the other hand, it did not work. At all.
That very year, Citi was already bailing out one of its hedge funds, Corporate Special Opportunities, to the tune of almost $1.8 billion. It did not work. Just a month after Vikram took the helm at Citi, CSO froze redemptions, when it went under earlier this year, investors got back just 3 cents on the dollar and its former manager sued the firm for wrongful termination.
But CSO wasn’t the only Citi hedge fund in trouble: The firm also bailed out its Falcon funds to the tune of $1 billion. That also did not work, and Citi was quickly fighting several class-action lawsuits.
By April of 2008–just a year after Pandit joined Citi–Citi AI was posting more than $350 million in losses and had to take a $202 million write-down tied to Old Lane, which was put out of its misery that June. Since Pandit took the reins, Citi AI’s assets under management have fallen by more than three-quarters.
No matter: In order to raise the $2.5 billion it wants, all Citi AI needs is a new name. So welcome Citi Capital Advisors, which should clearly fool investors into thinking that all is well at Citi’s hedge fund arm. Unless they see the word “Citi” at the beginning.
Citi to relaunch troubled unit [FT]
Wow! Breaking news! If only this had been in the opening bell!
Let me fix that:
Shiti Capital Advisors -
Our curry will have you running to the bathroom door.
Shazzy is big into things that suck in his tags.
@1 – It’s the law of Occam’s Shazar. All other things equal, the easiest post is best.
Changing names is the new killing it…
SHAZZITI
Hmmmm -
Citi Alternative Investments – “C.A.I.”
Central Intelligence Agency – “C.I.A.”
Coincidence??? Maybe they changed the name because they found out we were onto them . . .
Hey…forget Citi. Get a copy of this tape out there
http://www.eonline.com/uberblog/b152301_carrie_prejean_sex_tape_yours.html
Yes, there’s an even more secret elite fund at CAI, called the CFOD (Curry Fountain of Diarrhea), which as been getting spectacular returns, too secret to post here.
Is their high freq fund any good?
lets see, old lane was a bust from before citi negligently overpaid for it, but since the partners are friends of vikram, these same very successful managers decide to come in replicate the Old Lane experience, and gut the management of AI — performance tanks, assets flow out, the boys tire of their toys, decide they need to go and be able to break all the toys in the rest of the investment bank. they line their pockets. and when they tire of that they decide its time to fool everyone once again — so lets go raise some money and be able to pay for those clubs and houses they so richly deserve. because by the way feinberg cannot object to incentive fees paid by LPs. shareholders (of thats us via the TARP, whoops foolish me to call us shareholders, we should be called enablers) should be ashamed.
lets see, old lane was a bust from before citi negligently overpaid for it, but since the partners are friends of vikram, these same very successful managers decide to come in replicate the Old Lane experience, and gut the management of AI — performance tanks, assets flow out, the boys tire of their toys, decide they need to go and be able to break all the toys in the rest of the investment bank. they line their pockets. and when they tire of that they decide its time to fool everyone once again — so lets go raise some money and be able to pay for those clubs and houses they so richly deserve. because by the way feinberg cannot object to incentive fees paid by LPs. shareholders (oh thats us via the TARP, whoops foolish me to call us shareholders, we should be called enablers) should be ashamed.
This is exactly like Greg Michaels changing his name to Jon Shazar and thinking that no one would notice.
Who cares?
-Evil Banker
@13 no, it’s really not at all, despite your intent on making that joke happen.
yes it is
- not 13
no, it isn’t.
- not 15
I vote that 13, 15, 16, and 17 purchase four cheap handguns and the required ammunition from the local sporting goods store and then rent a cheap motel room.
Once in the motel, they each form a circle. In an exciting deviation from their regular routine, they then count to three at which point each man offs the asshole to the left with his pistol…as opposed to jerking off on him as would typically be the case.
http://www.ableammo.com/catalog/default.php?cPath=9935_13105
This can’t be Greg. Or am I being fooled?
More love from the Shiti peanut gallery here, including yet another investor lawsuit over CSO: http://bit.ly/1T9NeB
Shitipoop.
where is the manager of the Falcon fund? do any of the sales people actually have a job there?
Citi Alternative Investments is about 5% of the company. It vomits profit both capital and profits unlike any other business in the former Citi that existed under Chuck Prince and Sandy Weill. Lew Kaden and Bob Rubin propped it up, bringing in Vikram and Old Lane, knowing full well the hedge fund was on unstable ground. But Rubin was looking for a Citi leader in Pandit. Time, facts and financials prove Rubin and Pandit to be complete poison to the institution.
Pandit continues to use Citi Alternative Investments as a short-cut for his Morgan Stanley managers (second rate bankers, dare I say third rate or fourth rate at best?) to tunnel into what was once a promising institution. Five months at CAI and you are soon a senior manager at Citigroup. Unbelievable that the Board of Directors doesn’t see the bird crap on their shoulders.
the spineless citi board is happy to go along with the prevailing agenda as they are happy to be in those seats, its like currency. and who out there thinks these guys at the citi helm give a rat’s ass about anything but what they can get out of it? they already figured they fooled everybody with selling crappy old lane to citi for $800M, then the gov’t propped them up as they’re conveniently too big to fail. why is anyone surprised that other despised morgan stanley refugees are hiding out in cai?
DeVzLw I cannot thank you enough for the post. Great.
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