And Ken Griffen’s Citadel hedge fund recorded $16 Billion Profit For Clients In 2022. Citadel had a blowout year, and according to the WSJ, had generated about $28 billion in revenue. The impressive number, driven by a 38.1% return at the company’s flagship multi-strategy fund Wellington, far outpaced the hedge fund’s prior record of $16.2 billion the year before.
Today, in a follow up take of Citadel’s hedge fund performance, Bloomberg writes that Ken Griffin’s hedge fund printed a record $16 billion in profit for clients last year, not only outperforming the rest of the industry but also eclipsing one of history’s most successful financial plays, Paulson’s “greatest trade ever.” Adding Citadel’s $16 billion return to its previous profits effectively makes it the world’s most successful hedge fund, having generated more than $65 billion in net gains for clients since its launch and surpassing such titan as Bridgewater and DE Swah (although it may trail RenTec in terms of lifetime client returns).
According to estimates by FoF LCH Investments, Citadel’s 2022 gain was the largest annual return for a hedge fund manager, surpassing the $15 billion that John Paulson generated in 2007 on his bet against subprime mortgages. This was described as the “greatest trade ever” in a subsequent book of the same name by Gregory Zuckerman. However, unlike Paulson, who turned out to be a one-trick pony and has seen his hedge fund shrink dramatically in the years since the financial crisis amid a flood of outflows, Citadel is going from strength to strength, and of course, countless non-competes with its pod-based PMs.
Also unlike Paulson, Citadel’s performance wasn’t about one trade: the flagship Wellington fund gained a whopping 38% last year by trading everything from equities to commodities. The firm made money in each of its five core strategies, which also include fixed income and macro, quant and credit. Citadel returned about $8.5 billion in profit to investors at the end of last year.
And while Citadel success was tracked – if not matched – by its supersized peers, with the top 20 hedge fund firms collectively generating $22.4 billion in profit after fees, few other fund generated similar returns or were even in the same ballpark. Indeed, in a time when macro and huge, multi-strat, “pod”-based hedge funds (such as Millennium, Citadel, Balyasni and Point72) generate most of the profits.
LCH has estimated that the industry has produced gains in excess of $1.4 trillion for clients since inception. The top 20 managers, which oversaw almost 19% of the industry assets, produced $692 billion of that profit, or 49% of the total.
