Citadel had a great October as it adds people to calibrate PMs' performance
In case you haven't noticed, hedge funds are having a hard time. People are leaving; pods are closing; Elliott Investment Management is warning of a market that might suddenly switch to FOGO (fear of getting obliterated).
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In the circumstances, it should be easy to track portfolio managers who are performing and portfolio managers who are not. The latter are the ones with the big losses who are being ejected from funds in large numbers and who will be spending the winter wondering what to do next.
Bloomberg reports today that LMR (-0.8%), Dymon (-1.8%), NorthRock (-2.3%), Marshall Wace (-5.4% equity) and ExodusPoint (-2.4%) were among the funds down in October.
The FT says Millennium was down 2.3% in October. Bloomberg reported yesterday that Millennium pulled $1.5bn of external investments from Axebrook and Troluce Capital after losses at both firms.
Citadel, by comparison, was up 1.7% in October according to the FT. As we observed last week, a handful of people have left Citadel's London business for reasons that are not clear. Some left in September before the tribulations of the last month. Citadel declined to comment.
Citadel is among the funds that appear to be taking a more scientific approach to appraising staff. Citadel's large people analytics team is run by David Carlin, a former McKinsey & Co partner who joined in 2024. In January, Citadel hired Keith McNulty, also from McKinsey, as head of assessments. In September, it hired people analytics specialist Kevin Navikas to cover the fixed income business in New York.
After their strong October, Citadel PMs may expect to be paid. But Richard Averill, founder of Waterline Economics, which provides compensation analytics for hedge funds, says it's no longer that simple. "Funds now try to take everything into account," says Averill. "It's not just about PnL but the costs involved, including brokerage, market data charges and team and office costs."
PnL made in an expensive way with heavy prime brokerage fees is less valuable than PnL made cheaply, observes Averill. Banks learned a similar lesson in 2008; hedge funds may be learning it in 2026.
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