This content is from: Innovation
Amaranth Losses Make Citadel A Winner
The fickle finger of financial fate played a nasty trick on Amaranth Advisors but pointed positive for Citadel Investment Group, which has seen its two largest funds skyrocket by fivefold.
The fickle finger of financial fate played a nasty trick on Amaranth Advisors but pointed positive for Citadel Investment Group, which has seen its two largest funds skyrocket by fivefold. Bloomberg News reports that in September JPMorgan Chase sold half of its energy positions in Amaranth to the Chicago-based hedge funds, and those new stakes fueled a 3% growth in Citadels energy-related hedge funds. According to Citadels 363-page prospectus for its newly announced bond sale, the returns received in this transaction meaning the JPMorgan deal helped drive up two of its top energy funds by 3% in September alone. Citadel Kensington Global Strategies Fund climbed 7% in the third quarter, compared with a growth of 3.1% a year earlier; as of Sept. 30, Kensington blossomed by 17% this year, compared with about 8.8% for similar HFs. Citadels Wellington Fund also saw explosive growth from $54.3 million AUM to $389.1 million, partly because of the deal but also because of the firms hiring of a significant number of investment professional to work in its global credit and global energy practices. JPMorgan and Citadel had agreed to jointly take over Amaranths risk and returns in energy positions of about 20,000 trades, but, according to Bloomberg News, JPMorgan sold its half to Citadel in a $725 million deal less than two weeks later. JPMorgan CEO Jamie Dimon has called the sale to Citadel a victory since its energy-trading department has been a bit wobbly since its expansion began 2005, Bloomberg News reports.