Investors are ready to bet big again on superstar hedge fund manager Kenneth Griffin, having told his Citadel Investment Group that they plan to commit $1 billion early next year, people familiar with the matter said.
For Griffin, a 41-year-old billionaire, the news caps a year in which his flagship Kensington and Wellington funds came roaring back from heavy losses suffered during last year's financial crisis.
Through Monday, the two funds returned 62 percent, far more than the 19 percent the average hedge fund gained in the first 11 months of 2009, people familiar with the funds said.
The Kensington fund invested $7 billion while the Wellington fund invested $2.4 billion at the end of November. Including other assets, the firm manages roughly $13 billion.
The combination of this year's out-sized returns and Griffin's strong record — before 2008 the firm had lost money only once before, in 1994 — are enough to woo some hedge fund industry investors, including funds of funds, back to his Chicago-based fund firm, several people said.
For others it marks the first chance to put money with a man who ranks among the $2 trillion hedge fund industry's most successful. Griffin launched his first fund nearly two decades ago and started trading from his Harvard dormitory.
Citadel ranks as one of the world's 15 largest hedge fund firms, and its trading prowess is legendary. For years Citadel, whose assets peaked at $20 billion before the financial crisis, could afford to turn money away.
But after the flagship funds lost roughly 55 percent in 2008, more than double last year's average loss, and investors asked for about $1 billion of their money back, Griffin retooled some.
Since the second quarter, Citadel has been raising more for four new funds.
Now, potential investors say that he is joining a number of industry icons, including SAC Capital Advisors' Steven Cohen, who are giving would-be clients more of their time plus fresh insight into how they make money.
In late 2008 Citadel temporarily suspended redemptions from its Kensington and Wellington funds. Since then, the firm has paid out all of last year's redemptions, finishing the process in December, people familiar with the matter said.
This year there have been additional redemption requests for $500 million from the flagship funds, but investors familiar with Citadel said this is not unexpected since many clients like to take money out of funds that have performed especially well.
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