Citadel opens its 'gates' on better results
Citadel Investment Group told investors it would fully lift its 10-month ban on withdrawals from the hedge-fund firm.
The Chicago firm also confirmed that a banker it hired last year to build an investment bank, Rohit D'Souza, was leaving.
The developments showcase the challenges facing the firm that manages $14bn (€9.4bn) in assets as it tries to recover from a grim 2008 for its hedge funds while diversifying into other businesses.
Chief executive Kenneth Griffin built Citadel's reputation delivering strong hedge-fund returns. But last year the firm stumbled, losing more than 50% in its flagship funds.
"Unquestionably, some of our core strengths became liabilities last fall, including perhaps a degree of overconfidence in our ability to weather almost any market catastrophe," Griffin wrote in an investor letter sent Thursday.
He outlined some changes in strategy, including a greater focus on investments that would be easier to exit and more diversification in the portfolio.
Investors in the funds asked for about $1bn back in late 2008, and Citadel halted redemptions. While some other hedge funds started returning funds as markets improved this year, Citadel for a while didn't budge.
This month, Citadel's investors were allowed to take $250m in total on a pro rata basis. Now, the hedge fund's gates are opening up completely.
Citadel's two big funds, Wellington and Kensington Global Strategies, are up about 57%, the investor letter said.
Meanwhile, Citadel has continued efforts to diversify beyond hedge funds, with computer-driven, high-frequency trading and, more recently, an investment bank.
D'Souza, a former Merrill Lynch executive, was hired last October to help expand Citadel further into investment banking and brokerage.
Some 70 people have been hired for the group. Patrik Edsparr, president of Citadel Europe and head of global fixed income, will succeed D'Souza, Citadel confirmed.
News of D'Souza's departure was reported earlier by Bloomberg News.
At Merrill Lynch,D'Souza was global head of equities and alternative investments. He left Merrill in the spring of 2008. An email to D'Souza at Citadel, where he still has an office, wasn't immediately returned.
-- Write to Gregory Zuckerman at gregory.zuckerman@wsj.com and Joseph Checkler at joseph.checkler@dowjones.com -- This article can be viewed at http://europe.wsj.com/
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