Citadel's Reversal of Fortune

Posted by: Matthew Goldstein on February 03

Hedge fund magnate Ken Griffin’s luck may be changing.

Griffin’s two main funds at Citadel Investment Management ended January up 4.75%. That’s an impressive showing in light of the nearly 9% slide in the S&P500 during the first month of the year.

A good chunk of January’s gain came in the final week of the month. As of Jan. 26, the portfolios were up about 2.85%, according to preliminary information provided to investors.

It’s been a long time since Citadel’s nearly $10 billion Kensington and Wellington funds had a winning month. Last year Citadel’s flagship funds lost 54.6%—a startling blow to Griffin’s reputation as a trader extraordinaire.

Much of Citadel’s success in January is being attributed to a big turnaround in the performance of its convertible bond book and its equity trading. Source says January was one of the best months ever for equity trading at Citadel.

A year ago, Citadel began the year losing 3.5% in January. The hedge funds’ investors can only hope that this January’s results are a harbinger of good things to come.

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BusinessWeek's Adrienne Carter, Jessica Silver-Greenberg, and David Henry deconstruct the mysteries of high finance, Wall Street, and hedge funds for pros and ordinary investors. E-mail them directly if you've got tips about big deals, a hedge fund, or even securities industry gossip.

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