Citadel Cuts 45 People as Gutting of Aptigon Stock Unit Deepens

(Bloomberg) -- The doors at Citadel have been swinging fast and furiously.

Ken Griffin’s giant hedge fund has pushed out 45 people from its Aptigon Capital stock unit, or about a third of its staff, in one of the biggest shakeups at the hedge fund in recent years, according to people familiar with the matter. Griffin has been concerned about the direction of the unit, which has failed to make money since last year, the people said.

Griffin, who founded the $27 billion Citadel in Chicago in 1990, has built a reputation as an unforgiving boss who’s quick to dump employees. The gutting at Aptigon includes several employees who worked there for less than a year. At least one started as recently as December.

Last year, the firm merged its San Francisco-based Ravelin Capital stock group into another unit, letting five people go including the head. In 2016, Citadel made roughly 15 job cuts at Surveyor Capital, another equity unit.

Flagships Rise

The firings at Aptigon come as stock pickers anticipate a better year with more volatile markets. Aptigon and Surveyor manage money for the firm’s main multi-strategy Kensington and Wellington funds, which have returned 3 percent so far this year, and 13 percent in 2017.

The Aptigon shakeout began less than two weeks ago when Griffin pushed out the unit’s head, Richard Schimel, and Chief Operating Officer David Bonfili along with several analysts, associates and support staff. The firm continued the firings in the following days. Aptigon started the year with about 22 portfolio managers out of 140 employees. It now has about a dozen managers.

Citadel spokesman Zia Ahmed declined to comment on the number of people who had left the firm. It’s “committed to the success of Aptigon Capital and made a series of changes to strengthen the platform. We will continue to recruit leading talent to the team,” Ahmed said last week.

In 2016, Griffin picked Schimel to run Aptigon. Many of the people Schimel hired came from other hedge funds that had been forced to close because of poor performance or an inability to raise money. A few months after Schimel started, Aptigon brought on 20 people from Visium Asset Management, which had shuttered after three of its former traders were charged with securities fraud.

Visium Diaspora

Citadel promised the former Visium portfolio managers they’d soon be running $1 billion, including leverage, and said it would help them put together teams of analysts, the people said.

Some experienced Visium traders joined AllianceBernstein Holding LP, which had made a bid for the teams at the same time as Citadel. Almost all of those people remain at the firm in a unit called AB Arya Partners, which now manages about $1 billion and made 11 percent last year, according to people with knowledge of the matter.

Aptigon didn’t fare as well. Its performance was flat in 2017 due in part to the costs and time needed to bring on new teams. Nor did the fund make money in the first two months of 2018. Only two portfolio managers from Visium remain at Citadel.

Veteran managers at Citadel can run portfolios of up to $2.5 billion, including leverage, according to people familiar with the firm. At Aptigon, the most successful managers oversee about a $1 billion because the teams are newer, one of the people said.

Most of the remaining Aptigon managers have been at Citadel for 10 months or less, and three or four of them have not started running money, the people said. That means the unit won’t be contributing much to performance of Kensington and Wellington for several months.

To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net, Katia Porzecanski in New York at kporzecansk1@bloomberg.net.

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Vincent Bielski

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