Friday, February 13, 2009

Ken Griffin To Resume Bleeding To $0 AUM Soon

The stampede of Citadel clients who have been eagerly waiting to pull their money (which, despite a 4.95% up January, is still worth roughly 50 cents on the dollar after last year's performance) will be let loose any day now. Bloomberg reports that in a letter to investors, Kenny Griffin has realized that it is beneath any self-styled master of the universe to keep cash locked up despite loud protests to the contrary.

Citadel will decide each quarter whether to make payments from its Wellington and Kensington funds, Griffin, 40, said in an investor letter yesterday. Clients will be notified of any amounts available for redemption.

“We believe that this plan will allow us to maximize the value of our portfolio holdings and capitalize on opportunities in the marketplace,” Griffin said in the letter, a copy of which was obtained by Bloomberg News. He said the firm had “significantly” cut its holdings in hard-to-sell assets.
As this may push clients of other funds to finally succeed in getting access to their money, and force redemptions to resume, it is likely that the aggressive sell-down and deleveraging that hedge funds had to do in October and November repeats itself again, this time with even more feeling. Sphere: Related Content
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pwm76 said...

According to some fairly credible sources, half of the capital in hedge funds is gone relative to a year ago, and they have lower leverage levels. Will the effect really be as pronounced as October?