Citadel Hires Cumulus Energy Traders as Hedge Fund Shuts

(Bloomberg) -- Citadel LLC, the $28 billion investment firm, hired Cumulus founder and Chief Investment Officer Peter Brewer along with about 20 traders and analysts from the weather-driven hedge fund that’s shuttering.

The new hires will focus on energy trading, predominantly power and gas, and join Citadel immediately, Citadel spokesman Zia Ahmed said. Cumulus, which started as a power and gas fund more than a decade ago and hired weather scientists to give it a meteorological edge, will shut operations and return capital to investors as part of the plan, a person familiar with the situation said, asking not to be identified because the information isn’t public.

Citadel is bolstering this segment of its business after appointing Sebastian Barrack, formerly with Macquarie Group Ltd., last year to lead its commodities team. The new additions include people focused on weather research, fundamental analytics and trading, and bring Citadel’s commodities team to about 75. They’ll be based in London and Greenwich, Connecticut. Citadel meanwhile said it was shutting its sugar and ethanol desk last year, and had already pulled out of metals.

Cumulus declined to comment. The hedge fund was bought in 2012 by London-based asset manager City Financial Investment Co. While the person familiar with the situation said City Financial had agreed to transfer the entire Cumulus team, Citadel said Friday that not all members of the group were involved. Terms of the transaction weren’t disclosed.

Cumulus has traded weather derivatives and energy futures. The team looks for discrepancies in weather predictions to invest in through arbitrage opportunities.

“Attracting exceptional talent has always been the cornerstone of Citadel’s long-term success,” Barrack said in a statement. “We’re excited to add these individuals to our platform.”

Better predicting cold snaps that traditionally move energy prices, as well and floods and droughts that are becoming more common, could help Citadel. Natural disasters have become more frequent and intense since the 1980s, the United Nations’ Food & Agriculture Organization said last month.

©2018 Bloomberg L.P.

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