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It's the world of Kenny G | Financial Times

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Final figures are yet to be released, but 2022 will almost certainly prove to be another bad year for the hedge fund industry as a whole, and profoundly terrible for some big players.

But not for everyone!

(Reuters) – Kenneth Griffin’s Citadel posted record earnings across its hedge fund and e-commerce businesses for 2022 despite turmoil in global capital markets, a person familiar with the matter said on Thursday.

The hedge fund operation took in about $28 billion in revenue, while Citadel Securities, one of the world’s largest e-commerce firms, took in $7.5 billion.

The hedge fund unit’s record revenues come after a year of stellar performance for Citadel funds. Its flagship Wellington fund posted gains of 38.1% last year, while the fixed-income fund rose 32.58%, for example, according to the source.

We’ve written before about how multi-strategy hedge funds like Citadel are on the rise these days. Macro funds dominated the roost in 2022, but many large “multistrats” also enjoyed good to excellent years, despite the breadth of financial market vomiting.

For example, FTAV has heard that DE Shaw’s main fund returned 24.7 percent last year (his Oculus macro fund apparently returned 20 percent) and that Brevan Howard gained 20.1 percent (De’s Alpha Strategies Fund Brevan had its best year ever, rising a return of 28.5 percent). At the end of last year, Bloomberg pegged Millennium returns at 10%.

But Citadel stands out from the pack given its 38% gain on a massive amount of capital. By our estimation, that means Citadel will finally have overtaken Ray Dalio’s Bridgewater as the highest-grossing hedge fund of all time. Not bad for an ex-Boca computer geek.

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The annual net earnings since inception ranking compiled by LCH Investments will take a few weeks, but considering the $28 billion in earnings reported by Reuters and the WSJ that would put Citadel at $78 billion (LCH will not include CitSec earnings ).

Meanwhile, Bridgewater was on course for a fantastic year until they stumbled badly in recent months. That reduced the 2022 return on his Pure Alpha fund from around 22% in late September to just 6% in early December, according to Bloomberg.

Bridgewater offers different flavors of its strategy and we don’t know how much of its estimated $150 billion in assets under management is in Pure Alpha, the more leveraged Pure Alpha II, its risk par funds etc. dollar earnings for 2022 even when we look at final year returns.

But LCH estimated Bridgewater’s net earnings from inception to be $52.2 billion last year, and despite its much higher AUM, it seems very likely that Griffin will finally unseat Dalio at the top of the table. For reference, here’s what it looked like at this time last year:

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Our impression is that after a long time without caring about this ranking, Griffin started truth worrying a lot about it. So we suspect he’ll be very happy to climb to the top.

But brace yourself for the outpouring of fury that will inevitably hit certain parts of the internet when the headlines hit.

Additional reading:

— Ken Griffin, financial prodigy turned industry giant
— Multi-strategy hedge funds are the new and superior funds of funds
— How Ken Griffin rebuilt the Citadel walls
“What’s the Ken Griffin/Mayo story?”

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