Citadel Made More Than $4 Billion From Commodities in 2023
(Bloomberg) — Citadel’s commodity-trading business made more than $4 billion in 2023, people familiar with the matter said, helping drive profits for one of the world’s largest hedge funds.
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The gains came in part from strong performances by Citadel Energy Marketing, its merchant-trading business, as well as European gas and power trading, the people said.
A spokesperson for Citadel, which was founded by Ken Griffin, declined to comment.
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Citadel’s flagship fund gained 15.3% last year and the firm returned about $7 billion to clients. Its performance has been an outlier among other multi-strategy peers, many of whom posted single-digit returns in a challenging year.
Commodity returns have been a boon for the firm. Although last year’s result was eye-popping, it was about of half the roughly $8 billion that commodity trading brought in for Citadel in 2022, when the overall fund soared 38%. To be sure, 2022 was a sensational year across the commodities space as profits skyrocketed and many firms posted record results.
Gas and power markets have been especially volatile over the past two years, particularly in the aftermath of Russia’s invasion of Ukraine in early 2022, creating opportunities for traders to profit.
Miami-based Citadel has been active in commodities for years and last year hired Nathan Ohayon from Shell Plc as part of the efforts to build a fourth team in crude and refined-products trading. The commodities business is led by Sebastian Barrack, who joined in 2017 from Macquarie and has spearheaded the unit’s evolution into one of the sector’s most consequential investors.
Commodities is one of five core strategies at Citadel, along with equities, credit and convertibles, quantitative strategies and fixed income and macro. Citadel tops the list of hedge funds that have had the biggest profits since launch, with about $74 billion in net gains, according to estimates by LCH Investments.
–With assistance from Hema Parmar.
(Updates with commodities chief in penultimate paragraph.)
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