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The headquarters of Ken Griffin's Citadel and that of Dmitry Balyasny's eponymous cover fund are separated by a mile, the Chicago River and a lot of self-control.
All hedge funds are rivals, arguing for talent, data, and alpha – although Balyasny and Citadel seem to belong to different leagues, given their badets and recent performance. However, several sources told Business Insider that the war between the two hedge funds in Chicago had reached new heights.
The clearest example given by sources inside Citadel appeared at the end of February, a little over a month after Griffin's purchase of the ## 147 ## ################################################################################## The most expensive apartment sold in the United States, at the annual cabinet meeting where Griffin posted an internal email sent by Dmitry Balyasny. his staff in April of last year with the object "Adapt or die".
The e-mail said "we get hit on it", Balyasny claiming that the long and short performance of his company "is zero", according to a copy of the e-mail consulted by Business Insider. The email also mentioned that investors were wondering if Balyasny's staff had joined the group "so they could enjoy the pleasure of not working too much."
A source close to Citadel said that Griffin had used Balyasny's email as an example of what "a poor culture can do for a business," noting that he had also mentioned Enron at the same meeting. However, sources inside Citadel said that the conclusion of the meeting was that they needed to beat Balyasny, not the benefits of a strong work culture. Sources also indicated that the way Griffin got the internal email was not explained.
Balyasny wrote this email because he "was trying to light a fire under the team," according to a company source, and pointed out that the company has restructured, laying off a fifth of employees at the end of last year. may be when expectations are not satisfied. The company is up 4.2% in the first quarter of this year, while Citadel is up 6.35% over the same period. The S & P 500 is up more than 13% over the same period.
See more: Hedge Funds Monitor Legal Action Involving LinkedIn to See If They Can Spend Billions in Data Destroyed on the Web
"I have known Dmitry for twenty years and there is no problem between our companies, and as a Chicagoer, I only wish him and his team success in the years to come." Griffin said in a statement released to Business Insider.
Balyasny's representatives declined to comment.
Tensions between the two companies increased when Balyasny, which manages about $ 7 billion, began aggressively recruiting Citadel portfolio managers and badysts in 2017 and 2018, sources said.
But the poaching of Matt Giannini, General Manager of Business Development at Balyasny, at Citadel late last year has propelled competition to a higher level, according to several sources from both companies. Citadel has created a new role for Giannini, who previously worked at Citadel before joining Balyasny in 2012, charging him to recruit traders and other investment professionals into the fund's equity activities.
Griffin also outbid Balyasny to retain fixed income portfolio manager Nilsson Kocher this year after hiring to join Citadel's competitor and recently hiring Justin Dodd, Balyasny's portfolio manager since 2013.
In the meantime, Balyasny recruited former Citadel staff members, including his former data manager, Alex Lurye, and Jeff Runnfeldt, who was head of one of Citadel's equity arms. , Ravelin Capital.
Lurye and Runnfeldt have both been dropped by Citadel, a source close to Griffin said.
There is a difference in the type of talent that the two parties exchanged, according to industry sources, Balyasny often using Citadel badysts and badociated portfolio managers and promoting them. Citadel, on the other hand, was able to extract older employees from Balyasny.
"These companies are at different points of inflection in terms of size, resources, and ability to compete for talent – I would not call it a" rivalry between two Chicago companies. " Citadel's footprint goes well beyond that, "said Ilana Weinstein, CEO of the IDW hedge fund recruitment group.
In terms of performance, Citadel recently had the upper hand on Balyasny. Griffin's flagship Wellington Fund reported more than 9% last year, while Balyasny finished down 7%.
See more: Here are the managers of hedge funds to watch in 2019 as the industry fights against poor performance
Balyasny also blocked his long – time fund "best ideas" because of his poor performances last year. Several marketing executives and IR employees have left this year, including Stephanie Mesheski, Marketing and Marketing Director, and Rich Arbucci, Global Head of Platforms.
But a recent Balyasny investor letter says it has rebuilt its management teams with 10 new portfolio managers and 39 badysts since the beginning of the year, including six new Citadel portfolio managers, such as Elliot Wilson, Johnny Bubb and Chris Adams. and Peter Gong. Wilson was a portfolio manager in Citadel's global equity division, while Bubb, Adams and Gong were all badysts working at Griffin.
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