Hedge fund Citadel plans new stock picking business

[June 23, 2015]  By Svea Herbst-Bayliss

BOSTON (Reuters) - Citadel LLC, one of the world's largest hedge funds, is planning to launch a new equities business based on the West Coast that will be run by a former top executive who is returning to the firm after a few years away, a person familiar with the plan said.

Jeff Runnfeldt is scheduled to start in July and eventually head a group of 10 trading teams based in San Francisco, said the person, who is not permitted to discuss the matter publicly because Citadel's portfolios are private.

The move marks a big development in the life of Kenneth Griffin's $26 billion firm as it has collected big profits from its stock picking operation and embarks on building a new stand-alone business for the first time in many years.

The Wall Street Journal first reported Citadel's plans.

The still unnamed group, expected to begin operations later this year, is expected to put roughly $1 billion in assets to work, making investments in healthcare, industrials, financials, media and telecommunications among others.

Runnfeldt left Chicago-based Citadel in 2012, having been one of a three executives running the firm's global equities unit.

The Global Equities Fund has been one of its brightest stars recently, returning 23.4 percent in 2014, when hedge funds gained roughly 4 percent on average. Since January, it gained roughly 9 percent, again beating the roughly 4 percent gain averaged by funds.

Citadel's strong performance was reflected in last year's $1.3 billion payday for Griffin, who launched his trading career from his Harvard dormitory in the 1980s. Griffin beat out rivals as the industry's best paid manager, according to Institutional Investors' Alpha rankings.

The performance also underscores how Citadel has come roaring back after the 2008 financial crisis, when its flagship funds lost roughly 50 percent.

(Reporting by Svea Herbst-Bayliss; Editing by Steve Orlofsky)

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