Toomre Capital Markets LLC

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Citadel Investment Group's Main Hedge Funds for 2008: Negative 53%!!

According to Dow Jones, the preliminary 2008 results for Citadel Investment Group’s main hedge funds are out and the numbers are not pretty. The $10 billion Kensington and Wellington hedge funds lost approximately 53% for 2008 and were down about 9% during the first 24 days of December. Chicago-based Citadel last month barred investors from withdrawing money from these two hedge funds until at least March 2009. With such “wonderful” performance, one has to wonder how much of the funds’ investors have queued up to leave once it is again possible to do so.

Toomre Capital Markets LLC (“TCM”) previously has written about Citadel in the post Citadel Investment Group To Try To Raise $500 Million. With this type of performance, though, TCM is now wondering whether Citadel Investment Group will survive the on-going credit crunch. In order to get back to their “high water” mark (at which point they can again start to earn performance fees), Citadel will need more than a 100% gain from their 2008 year-end balances. Citadel earned more than thirty percent in 2007. It will need approximately three years of such “lights out” performance before it will pass the former “high water” mark. Can they really successfully run the hedge fund company just on management fees? Time will tell. Reader comments and thoughts are welcome.