Citadel Cuts Risk, Plans To Boost Leverage?

Jul 28 2011 | 12:54pm ET

Add Citadel Investment Group to the list of top hedge funds cutting risk.

The $11 billion hedge fund giant is now requiring all equity managers to balance their books at the end of each trading day. The beta-neutral order was put into place in recent weeks, limiting the amount of risk that Citadel portfolio managers can take, Hedge Fund Alert reports.

Citadel isn't the only firm reining in risk: Soros Fund Management, before its announcement this week that it would return all outside capital, is currently about 75% in cash, and Moore Capital Management has also been cutting risk. Both of those firms are down about 6% through the first half.

Citadel's reasons for cutting risk may be somewhat different, however. The firm, whose flagship Kensington and Wellington funds are up about 11% this year but remain below their high-water marks, may be planning to boost leverage in an effort to get over that hump and begin charging performance fees once again, according to HFA.

The firm has denied reports that it recently raised its leverage limit on stock investments, saying that it has held steady at about six-times levered. Citadel's flagships were roughly eight time levered in 2008, when Kensington and Wellington each lost more than half their value.


In Depth

Q&A: Quad Advisors’ Borish Is Looking For Real Traders, Not Index Huggers

Aug 20 2014 | 1:43pm ET

Peter Borish, who served as founding partner and director of research at Tudor Investment...

Lifestyle

Nicky Hilton To Wed James Rothschild

Aug 20 2014 | 5:23am ET

When it comes to husband-material, socialite Nicky Hilton is sticking with finance...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

 

Futures Magazine

PREVIEW July/August 2014 Cover

Inside Futures' 500th Issue

The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.

The Alpha Pages

TAP July/August 2014 Cover

Real talk on alternative investments, business & finance

The Alpha Pages Editor's Note