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Curatia Analysis for Tue, Apr 23

Profiles in Coverage: How Citadel’s Unrivaled Mystique Channels the Zombie Apocalypse

Despite maintaining a notoriously low profile, Citadel has managed to build practically unparalleled brand cachet. In the last month alone, the hedge fund titan garnered 11 stories with popularity scores of 92 or higher, only occasionally descending from that rarefied air.

Fund outperformance, charismatic leadership, and prestigious hires figure prominently in that success. But the firm has also excelled peers by carefully cultivating a reputation for operating beyond the pale of traditional finance — and free of its attendant bureaucracy.

Fund Outperformance

The first and most obvious ingredient in Citadel's mystique is its consistent financial success, as the popularity of articles dissecting the hedge fund's performance and trading strategies attests.

After dramatically outperforming hedge fund peers (-6%) en route to a 9% gain last year, Citadel's flagship fund (+6.4%) outpaced peers Point72 (+4.8%), Balyasny (+4.2%), and Millennium (+1.7%) in Q1, trailing only Och-Ziff (+7.9%) (97 popularity).

Citadel’s gains have fueled interest in its methods. Even two inscrutable Alphacution pieces attempting to reverse engineer the firm’s recipe for trading success by analyzing its 13F filings — “Citadel’s Secret Sauce” (100 popularity) and “Deconstructing Citadel and Why It Matters” (100 popularity) — maxed out our popularity scale.

Those statistical outliers highlight both readers’ insatiable appetite for all things Citadel and the paucity of quality information available on the firm’s machinations — an asymmetry that leaves readers ample room to romanticize Citadel’s inner workings.

Charismatic Leadership

Founder Ken Griffin has likewise nurtured industry interest in Citadel through his charismatic leadership. In a March Bloomberg interview, Mr. Griffin emphasized the importance of delegation and trust to Citadel even as David Rubenstein recounted exceptional tales of Mr. Griffin’s daytrading in a Harvard dorm room (93 popularity).

Mr. Griffin has taken an active role in New York’s cultural scene, funding a 500-seat theater at Hudson Yards as well as the lobby of the Whitney and the east wing of the MOMA (69 popularity). He’s encouraged Citadel employees to be “‘civically and politically engaged’” to get “‘more perspective about the role we play in society.’”

A shroud of secrecy veiling the firm’s day-to-day operations has arguably elevated the visibility of those endeavors.

Prestigious Hires

Citadel has also elevated its reputation through prestigious hires of personnel with eclectic backgrounds for which it has often crafted purpose-built roles.

Compliance executive Stan Yakoff — who holds a Fordham law degree plus master’s degrees in engineering management, pharmaceutical manufacturing engineering, and technology, policy and ethics — joined Citadel last week to help supervise its equity trading desks (100 popularity).

Until late 2018 it employed Harvard neuroscience PhD Juliette Han as chief of staff to the hedge fund's chief people officer.

In February, Margate Capital founder Samantha Greenberg took the unusual step of shuttering her own hedge fund to join Citadel’s Ashler Capital as a portfolio manager (99 popularity).

Collectively, those moves show a readiness to operate outside the conventions of Wall Street recruitment, hiring highly educated individuals with diverse backgrounds into unique positions.

Zombie Apocalypse

The iconic hedge fund’s secrecy, reliance on highly centralized leadership, and unorthodox hiring practices all cut against the bureaucratic grain endemic in most large financial firms.

Therein lies Citadel’s mystique. In a highly structured, bureaucratic financial world where public messaging is central to advancing a firm’s agenda, Citadel has become an object of industry fascination precisely because it eschews such convention — and wins anyway.

In that sense, industry obsession with Citadel mirrors an unfolding public fascination with the zombie apocalypse and its subversive theme of demolishing the existing social order. That trope holds out the perverse promise of liberation from the suffocating structure of our stultifying routine with its grocery store lines, work commutes, tax forms, haircuts.

Paradoxically, Citadel’s key advantage in cultivating an exceptional public persona is not the information it divulges but rather the secrecy it maintains — alpha generation applied to media relations — which lets us all keep idealizing it.

Work at Citadel may be every bit as humdrum as at other financial firms. But we’ll only find out if zombies tear down the walls of the place. And then it will be too late.