Citadel

“When I went to work for Citadel, it was an opportunity to go work for a guy who I think Holds the title world's best moneymaker, Ken Griffin, and a chance to understand how he put that organization together, how he managed to just print money for a longer per…”

“I saw that guys like Two Sigma and Citadel and Rentech and the discretionary trading houses, none of them were in crypto for good reasons.”

“The only criticism I ever hear about the Citadel model is the better I do, the more gross they want to give me.”

“We'd gone from less than a billion to eight billion at this time. Sidville was now one of the biggest hedge funds in the world.”

“When I went, they were just Approaching a billion. So they were no bigger than Baker and I. In fact, Baker and I was bigger at the time.”

“Ken Griffin had decided that he didn't want people who were important in the business partners running bits of his business all over the world. He wanted everybody who was senior to be in Chicago.”

“We're taking two systems at Northern Trust. One, the front office solution system, which does have an incredible data model around alternatives, and combining that with the power of a system that we bought called Omnium, which we bought from Citadel.”

“So I really, truly believe that they are the new shadow banking system, that whenever something goes awry, there's a reason why Millennium hired who they hired, why Citadel hired who they hired, to make sure that when the calamity occurs, they call the Fed for…”

“No one has done it better than Ken Griffin. But one of the things that really struck me was that it's not investing. There's actually no part of investing to it. It's managing a bunch of tickers within a risk framework.”

“The lower the volatility in the world, the more capital they're deploying. And that was a very interesting concept for us. A concept to that was an eye opening experience. And more importantly, probably now it is dictating a lot of the flows and the performanc…”

“Because I can imagine if someone took what we were doing way back when and put it in a Millennium slash Citadel native IDEO model, we'd probably be fired on the spot.”

“Ted, I doubt it, because I don't think what we're doing here is infinitely scalable. Whereas I look at what a Millennium and Citadel have done, and I get the scale that they run at, and I think it's amazing. But the way we like to run money, we can't be big, b…”

“Because we can't beat the machines. You cannot beat the Citadel analysts. There's 50 of them all looking at the same name and back book behind it, and it's hard to beat that.”

“So what do we do? We allocate it to their spinoffs. And it's mostly Citadel spinoffs. They've done very well, and they're closer to two and 20, and we get roughly 50% of the gross alpha, and we diversify.”

“The EROC is terrible. And another way to think about it is, of the total gross alpha, how much do they keep? It's about 80%. We get 20% of the alpha. The alpha's huge. Absolutely huge. But we could never get comfortable with only getting 20%.”

“The quant businesses there, for example, are very developed, whereas we're in the process of building out a quant business. So they have the advantage of having that P&L stream where we don't yet, and they have the infrastructure for it where we're building.”

“I'd be very surprised if you don't see one of the larger private equity players try to grow through acquiring teams. They are long capital and short origination or dealmaking capability relative to the capital they could command. So it does make sense that if …”

“One of the funny things about the industry is everybody looks at somebody at a private equity firm or Citadel or a hedge fund or long-only and thinks they're so different. They're the same people. They're just moving around seats.”

“What was happening in oh four, oh five is the first time you had to start dealing with crowdedness. Some of these banks were risk arb desks, we were stat arb desks, Citadel was convert arb desks, some guys were fixed income arb desks, and suddenly the arb star…”

“There was a big talent war in 2017 to 2022. Interest rates were zero. The whole multi-manager industry was tiny in 2016, 17, when Millennium and Citadel were really the two big ones that were managing third party capital.”