But he’s trying to raise new money and every single time he sits down with a potential source of cashola, or tries to convince an existing one to stick it out, last year is all they want to talk about. While it’s unclear to us as to why Griffin doesn’t just put his foot down and preempt all discussions by saying questions about 2008 are categorically off the table and that if anyone in the room so much as thinks the words “fifty-five percent loss” or “ass bleeding” or “maday!” he is gone, we respect the guy’s desire to be seen as flexible, for the time being. Still, we understand how sensitive the subject of ast-lay ear-yay is with KG and so that he doesn’t have to suffer through anymore PTSD flashbacks, we’ve decided to put together a little primer/pitch for anyone considering throwing some bills his way. The year that came before ’09 will be touched on, so when you actually sit down with Kenny-b, there’ll be no need to bring it up. Got it? Let’s do this.
Most of you probably want to hear a little reflection on what we could have done differently. What our biggest mistake was so we don’t make it again, and lose a few billion of your money. Was it too much leverage? Too much hubris? Too much time spent away from the desk on photo-shoots? None of the above.
Citadel’s biggest mistake last year, Mr. Griffin said, was putting too much faith in regulators’ ability to deal with the global meltdown.
Now let’s talk sacrifices. Major, huge-ass sacrifices have been made in Chicago in an effort to turn things around. Whether or not they have to do with the firm’s bottom line so much as Ken’s newly taut one is not the point.
He occasionally dispatches his driver on a 200-mile round trip to fetch milkshakes from LeDuc’s Frozen Custard in Wales, Wis., near where Mr. Griffin grew up. The folks at LeDuc’s refer to the financier as “the man of a thousand shakes,” based on a birthday order in 2004 that was so big, it got shipped to Chicago in a truck. But Mr. Griffin’s driver “hasn’t been around in maybe six months or a year,” says Jim Shackton, owner of LeDuc’s, whose staff in past years came to recognize him when he’d pull up to the little pitched-roof custard shop in a silver Mercedes sedan. (“Nice car,” Mr. Shackton says.)
And endorsements. Bet you’d like some of those.
Mr. Yusko of Morgan Creek Capital Management says he has invested more in Citadel this year and could add additional money. “I don’t think they’re geniuses this year, and I don’t think they were idiots last year,” he said.
And of course the Goldman Sachs seal of approval.
Last year Mr. Griffin spoke frequently by phone with top executives at Goldman Sachs Group Inc., including President Gary Cohn and Chief Executive Lloyd Blankfein, regarding the markets and Citadel’s financial straits, people familiar with the matter say.
“We have a strong relationship with Citadel and we felt very comfortable with our risk at the time,” Mr. Cohn said recently.
Now how about a little deep talk. Let’s get you somea that.
Reflecting on 2008, Mr. Griffin wrote to clients at the end of October, “Unquestioningly, some of our core strengths became liabilities last fall, including perhaps a degree of over-confidence in our ability to weather almost any market catastrophe.”
And a little hindsight, which while it won’t put the lost moola back in investors’ pockets, per se, should make you feel safe. You’re money’s good with us.
If there were a repeat of 2008′s market turmoil, Mr. Griffin says, his funds would lose less than 20% rather than 55%. Citadel’s biggest hedge fund has rebounded 58% this year through mid-November.
In sum I’m just going to get down on my knees and beg.
Nevertheless, some investors question whether Citadel can still post big returns to match the outsized fees it charges. Despite the rebound this year in Citadel’s hedge-fund performance, they still must earn back far more to recover last year’s losses. Mr. Griffin acknowledges that process could take another year or even two. Until then, Citadel isn’t eligible for lucrative 20% fees on the funds’ profits.
This is one reason why the new hedge funds are so important: They have no ground to make up, so they can earn fees immediately. In the first quarter, Citadel told investors it was hoping to raise more than $2 billion over several years for a new fund designed to invest in currencies, interest rates and broad economic trends. However, by October, outside investors had put less than $100 million into the fund, people familiar with it say.
The fundraising has fallen short of early goals, according to people familiar with the matter. All told, Citadel says it has gotten $500 million in commitments for all of its new hedge funds.
I think we’ve sufficiently proved why you should get invested with us today, and also why everyone should shut it up ’08. And tell you what? If things start to go south again– which they NEVER WILL– we’ll transfer your money to the Mrs’s fund. Deal?
A Hedge Fund King Comes Under Siege [WSJ]
That hispanic wife of his, i’d drink her milkshake.
how is this jagoff still in business?
He looks so Iron Eagle in that picture.
@1 um, she’s french. wtf are you talking about.
1=julian robertson. examine your motives.
speaking of hedge fund managers and photoshoots?
No comment.
no, the leverage had nothing to do with it.
You mean to tell me he can’t find a comparable milkshake in Chicago….good grief
Iron Eagle was wonderful movie. Tragedy and Triumph. One man’s will to overcome daunting odds. The Hades Bomb.
Chappy
@ 4, uh, her last name is “Dias”, so she’s hispanic.
-1
“In sum I’m just going to get down on my knees”
I’m hiring a new IR girl and her name is Bess Levin.
-KG
do ken’s milkshakes bring all the boys to the yard?
If I am any one of his LP’s reading this piece, I’m submitting a redemption request for all of my money.
Here’s a rough LP translation.
“I don’t think of this as a responsibility to safeguard and grow YOUR hard-earned capital that you have entrusted me with. Rather, I have given you the PRIVILEDGE of investing with me, so it’s an annoyance to probe when I lose 55% of it”
“Further, I’m awesome. My biggest mistake was in assuming others are awesome, which they are clearly not. Because I’m awesome, my 3-5x leveraged fund would have prospered last year if only regulators would have been even a little awesome”
Meh. This guy is sooo 2007. Alfred Winslow Jones would straight roll over in his mother-F$&#% grave if he heard KG talking like this.
Doug Masters was/is the shit.
1)Cost of sending a driver to get a milkshake 200 miles away
Driver’s time (400 miles / 60MPH) = 6.7hrs x $25/hr = $167.50
Cost of running Mercedes 500CLS = $200
2) Cost of LeDuc’s custard shake = $1.99
Total Cost for Ken’s shake = $369.49
Listening to Ken explain how Citadel is now a tight ship (even though it occasionally bumps into icebergs) … priceless.
rosebud.
This guy is a fucking hack.
SAC
@14 try 8 times leveraged.
-kg
Thats not a hair question.
Ken, if I had lost 55%, accidentally or otherwise, I wouldn’t have thought twice. I’d killed myself on the fucking spot. On the fucking spot. I would’ve stuck the gun in me mouth. On the fucking spot!
To go along with #21′s point….Ken, not only have you refused to kill the fund, you even stopped the fund from killing itself, which would’ve solved my problem, which would’ve solved your problem, which sounds like it would’ve solved the fund’s problem.
-Harry
@21, 22 You two are weird. Would you like some cocaine?
“Once thought of as humorless and stiff, he now comes across as more personable and even makes the occasional quip.”
http://dealbreaker.com/2008/12/citadel-is-on-top-of-the-world.php
@23 – You know, I’m not sure it’s really #21′s thing.
Griffin is a fink.
is there any original reporting on this website? i saw this story in the journal a while ago.
- someone who, if he wants to read poorly written snark, will read fark.com
@27 hmm, let’s see, yes, there is original reporting on this site, and if you actually read it regularly, and weren’t just an employee of Ken (or Ken himself), you’d know that. also, you read it a while ago? cause it came out this morning. thanks for playing.
27=virgin loser with greasy hair. Examine your dandruff, overbite and mouth breathing.
Ken,
You should try my shakes.
Chazzoli
@15- Doug Masters dad? I fucked him! Hoa!
Please don’t tell him we jerk off in his milkshakes.
Counter Boy at LeDuc’s Frozen Custard
@27 – I used to fuck guys like you in prison.
- Jimmy
Low water mark
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Gonna go ahead and call bullsh*t on this one. Theres is simply no way to transport a semi-frozen coagulation of dairy product 100 mi. without the destroying the integrity of the multiple properties which constitute is inherent delciousness. Said shake would either A.) be warm milk or B.) frozen solid upon arrival, depending on transport procedures.
Let’s keep it honest, Griffin.
-Not Greg Michaels
Gonna go ahead and call bullsh*t on this one. Theres is simply no way to transport a semi-frozen coagulation of dairy product 100 mi. without the destroying the integrity of the multiple properties which constitute is inherent delciousness. Said shake would either A.) be warm milk or B.) frozen solid upon arrival, depending on transport procedures.
Let’s keep it honest, Griffin.
-Not Greg Michaels
I drink your……….MILKSHAKE!
**shluuuuuuuuuuuuuuuuuuurp!!**
I DRINK IT UP!!
KG should probably lay off the custard drinks, he was rocking a gobble-gobble double chin when they opened up the Griffin Court at the Art Institute of Chicago. Otherwise AD-G, his french/hispanic/whatever partner in crime, might start going out for three-hour “milkshake runs”.
@37 excuse you? i’ve lost 20 lbs and counting.
http://dealbreaker.com/2009/10/ken-griffin-on-losing-streak.php
-kg
@21,22 – bravo.
huge ass?
fu.
-kg
someone do the friggin math. griff lost 9 tons last year. does that mean that as of the beginning of 09 he was at or below breakeven net-net?
it would be like a-rod giving back 600 dingers in a season.
how many ceo’s outside the airline industry would still be working with that record?
@26 Interesting thesis, care to elaborate on that comment? How could you people have overlooked this juicy tidbit?
@41 I can think of 435 with significantly worse records that get re-hired every 2 years.
@26 Interesting thesis, care to elaborate on that comment? How could you people have overlooked this juicy tidbit?
@26 Interesting thesis, care to elaborate on that comment? How could you people have overlooked this juicy tidbit?
@42 & 44-46 what do you mean, you people?
@41 — still billions of dollars in net returns generated for investors even after accounting for 2008.
@48 – don’t be an apologist for a guy who lost the GDP of many a nation. anyone who ever loses half your money and puts up gates is not a person to do business with.
why would anyone allocate to these funds instead of using alphaClone is beyond me
http://alphaclone.com/
Get your facts straigh….Ken grew up in Boca Raton Florida. If key facts are wrong makes me wonder what in your article is actually true.
Get your facts straight….Ken grew up in Boca Raton Florida. If key facts are wrong makes me wonder what in your article is actually true.
@51/52 perhaps you should leave that comment on the wsj, which is the outlet that got the facts wrong, according to you.
The Fact that matters is the haters on here could have invested with K to the G during his drawdown and made a 63$ return through July 2010….
Nobody gives credit to the fact that this guy is a survivor and didn’t quit like so many other managers did or would have in his shoes….
So he is still in a 25% or so drawdown, right with the S&P 500…. He has resilience and most of the HF community and HOT MONEY FOF A Holes do not understand that drawdowns are a natural part of trading…. the only people without them are the Allen Stanfords of the world…