Citadel’s Griffin Taps Longtime Partner James Yeh as Co-CIO

(Bloomberg) -- Ken Griffin promoted James Yeh to president and co-chief investment officer at Citadel, tapping a longtime partner to help run the fast-growing hedge fund firm alongside him.

Yeh, 53, has been a key player at Citadel since he joined the Chicago-based firm in 1993 as one of its first employees. In his new role, announced on Wednesday, he will oversee the Global Quantitative Strategies business as well as the global fixed income and macro unit.

Griffin is tapping a co-leader as he has grown hedge fund assets to more than $32 billion, built his trading execution platform, and raised his public profile. He’s made headlines by spending his wealth through philanthropy and record-setting real estate purchases.

“James has been a phenomenal contributor to Citadel’s success for nearly three decades,” Griffin, 51, said in an emailed statement. “Much of our success can be attributed to James’ efforts.”

At different times in his career at the firm, Yeh, a Ph.D. physicist, helped build the firm’s statistical arbitrage business, led Citadel Global Equities and helped found its quant business, which he ran until April. He retired in 2013 but returned four years later.

As part of his new role, Yeh will also run the analytics that support research for Citadel’s equity groups.

“Ken has made no secret of his desire to build a business that is greater than him and rivals the best of Wall Street, and to do this he has to have a management structure that isn’t reliant on Ken Griffin,” said Allen Erickson, who invests money in hedge funds for ultrahigh-net-worth individuals at Turtle Lane Partners.

The announcement comes on the back of several big changes at Citadel, which has tripled in assets over the last decade.

In October, former Goldman Sachs Group Inc. trader Pablo Salame was named head of the firm’s credit business. A month prior, Griffin merged its macro and fixed-income groups, and earlier this year he shuttered one of Citadel’s equity units.

In April, Navneet Arora succeeded Yeh in overseeing the quant business, with the firm saying at the time that Yeh would continue on as a senior adviser to Griffin.

At Griffin’s age, succession planning isn’t an urgent question for investors. And because of Citadel’s structure, it’s not as critical: The firm has several business heads overseeing dozens of teams of money managers within those units who invest capital across strategies and asset classes independently from one another. Many other hedge fund firms are structured entirely around one portfolio manager, with the success of the fund hinging on that key individual.

“Consider running a business of Citadel’s scale and the duties of management to stakeholders,” said Erickson. “For an aging founder to look ahead toward health issues, family issues, or even how to take a long relaxing vacation for the first time in 30 years without disrupting the management structure is just good management.”

Griffin, who founded Citadel in 1990, started trading convertible bonds from his dorm room at Harvard University. His firm is now comprised of three equity units -- Citadel Global Equities, Surveyor Capital and Ashler Capital -- as well as the fixed-income and macro, quantitative, credit and commodities businesses.

Together, the various groups feed into Citadel’s flagship hedge funds, which are beating their biggest multi-strategy rivals this year, gaining 15.2% through October. The firm’s Tactical Trading fund, a separate multi-strategy fund that employs equity and quantitative strategies, rose 17.2% over the period.

A Citadel spokesman declined to comment on the returns.

To contact the reporter on this story: Katia Porzecanski in New York at kporzecansk1@bloomberg.net

To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Vincent Bielski

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