Ken Griffin, the head of the Chicago-based hedge fund Citadel, is not at all pleased with Ben Bernanke.

After a morning of panels at the Milken Institute Global Conference, what stands out to me most is Griffin's take on the Fed's current policies.

There's a lot of worry that the central bank's actions could be inflating asset bubbles. But that's not what has Griffin worried. Instead, he fears that the zero interest rate target and quantitative easing may be backfiring, causing businesses to reduce employment rather than adding jobs.

According to Griffin, low interest rates have encouraged businesses to invest in technology that reduces the demand for human labor. Meanwhile, health care reforms have increased the cost of human capital—so it's a double whammy.

"As we've all learned over the years, if you reduce the cost of capital you increase your use of fixed assets and you take out jobs. Corporate America, seeing an ever increasing cost for its employee base and extraordinarily low interest rates, is taking every step it can possibly take to reduce employment, to build factories abroad and domestically to substitute technology and automated processes for people," Griffin said.

That's pretty far from standard economic thinking, for sure. But it at least tells a coherent story about why the massive increase in the Fed's balance sheet hasn't been more effective and putting us on a healthier economic path.

(For more from the Milken Conference, seeReal Estate Moguls Seek Riches Overseas and Surfing the Markets with Mohamed El-Erian)

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Hedge fund billionaire Ken Griffin, who runs Chicago-based Citadel, says that a Century Fox and Time Warner deal "makes a lot of sense."

Earlier today, it was reported that Century Fox offered to buy Time Warner in a deal valued at $80 billion.  Time Warner has rejected that offer.

Griffin told the audience at the CNBC Delivering Alpha Conference that both media companies have "great assets" and that it would be a good deal for both of them. 

Citadel's portfolio includes both Time Warner and Century Fox. 

"I think we'll get to 'yes,'" he said. 

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Hedge fund manager Ken Griffin was asked about how many swipes of the security badge it takes to get to Citadel's trading floor in the Chicago office.

Citadel, which was included in Michael Lewis' high-frequency trading book "Flash Boys," is known for being supersecretive. 

CNBC reporter Kate Kelly pointed out that a government employee only needs two card swipes to get to his/her desk, while a trader at Citadel would need five. 

"We need to protect our intellectual property," Griffin responded after going through the swipes he does every day — the parking garage, the building entrance, elevator, trading floor, etc. 

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Former Citadel employee Yihao Ben Pu faces up to 20 years in prison after pleading guilty to stealing secret quantitative information from the Chicago-based hedge fund and another firm, Bloomberg News reports.

Pu entered into the plea agreement with federal prosecutors on Thursday.

While admitting that he stole codes from Citadel, he also confessed that he had taken codes from an unnamed New Jersey-based firm, the report said.

Pu now faces up to a combined 20 years for each of the two counts. He also faces up to $500,000 in fines for the two counts, according to Bloomberg News. 

In 2011, federal authorities arrested Pu, a former quantitative engineer, for stealing sensitive information about the fund's computer-driven trading strategies and downloading it to his personal devices before attempting to destroy them. 

He attempted to destroy those devices by throwing them into a sanitary canal, ABC channel 7 in Chicago reported. Divers were able to retrieve the external devices that contained Citadel's alphas. 

Citadel, which is run by billionaire Ken Griffin, is known for being incredibly secretive. 

Michael Lewis' book "Flash Boys" briefly details how it takes five swipes just to get to the trading floor.

"I read that passage in the book and thought how many card swipes does it take. One from the garage, the main floor, one to the turnstile, one to the elevator floor, and two to get to the desk, to the trading division. Again, the book is a great story. We obviously pay a lot of attention to protecting our intellectual property," Griffin said at the CNBC Delivering Alpha conference last month. 

Griffin added that it was incredibly important for him to protect his fund's computer code. 

"You know all this is, is idea, thoughts, and concepts expressed in computer code. And unfortunately, that intellectual property is readily moved, and it's very important for us to protect it," Griffin explained, adding, "Think about how much of an effort Coca-Cola makes to protect the recipe for Coke. We have to do the same thing to protect our intellectual property." 

You've been warned. 

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Ken Griffin's wife has filed a response to his divorce petition asking the court to void the couple's prenuptial agreement, claiming she was rushed into signing it before their wedding, Crain's reports, citing the filing.

Back in July, Griffin filed for divorce from his wife of 11 years, Anne Dias-Griffin, while she was on summer vacation with their three children.

Griffin, 45, is the founder of the Chicago-based hedge fund giant Citadel LLC. Dias-Griffin, 43, was born in France. She is the founder of the hedge fund firm Aragon Global Management.

Dias-Griffin is now seeking equitable division of their assets and sole custody of their children, the Crain's report said, citing the filing. She wants their prenup thrown out.

According to Crain's, Dias-Griffin says she didn't receive a copy of the prenup until shortly before the wedding date, and she was busy with wedding plans and running her hedge fund firm.

Dias-Griffin also said she told Griffin she didn't want to sign the prenup. This, according to Dias-Griffin's filing, led to an argument in which she said Griffin "destroyed a piece of furniture in their home."

Dias-Griffin says Griffin got her to meet with a psychologist. According to Dias-Griffin, the psychologist sided with Griffin. She ended up signing the prenup three hours before the rehearsal dinner.

Griffin's attorney maintains that the prenup is valid. He also told Crain's that Dias-Griffin's allegations were "simply untrue."

Under the terms of the prenup, she says she will receive 1 percent of Griffin's assets. Griffin has an estimated net worth of $5.5 billion, according to Forbes.

Griffin and Dias-Griffin were married in Versailles in July 2003. This is the second divorce for Griffin. He divorced his first wife in 1994.

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Hedge fund billionaire Ken Griffin claims that his soon-to-be-ex-wife is requesting $1 million per month in living expenses/child support, CNBC's Robert Frank reports citing court documents. 

According to CNBC, some of the alleged expenses Dias-Griffin is requesting include $6,800 on groceries, $7,200 for meals and $8,000 for gifts. The monthly expenses also include $300,000 intercontinental private jet travel and $60,000 for private staff, the report said.

Griffin also claims that Dias-Griffin wanted $450,000 for a St. Bart's vacation over winter break. He forked over $45,000 for that vacation instead, the report said. 

Dias-Griffin's attorney didn't deny those expenses, CNBC pointed out. 

Last July, Griffin filed for divorce from his wife of 11 years, Dias-Griffin, while she was on summer vacation with their three children.

Griffin, 46, is the founder of hedge fund giant Citadel LLC. Dias-Griffin, 44, was born in France. She is the founder of the hedge fund firm Aragon Global Management.

Dias-Griffin later filed a petition seeking equitable division of their assets and sole custody of their children. She asked for their prenup thrown out.

Under the terms of the prenup, Dias-Griffin said that she will receive 1 percent of Griffin's assets. Griffin has an estimated net worth of $6.5 billion, according to Forbes.

Griffin and Dias-Griffin were married in Versailles in July 2003. This is the second divorce for Griffin. He divorced his first wife in 1994.

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Chicago hedge fund manager Ken Griffin makes more than $90,000 per hour even while he's sleeping, CNBC reports citing a new court filing from his soon-to-be-ex-wife.

CNBC's Robert Frank reports: 

According to the latest filings, Griffin's ex-wife, Anne Dias, said his monthly gross income "approaches $100 million," and his net monthly income after taxes "averages over $68.5 million."

That works out to more than $2.2 million a day, or upward of $90,000 per hour.

Just last month, Griffin alleged in a filing that his ex was requesting that he give her $1 million per month to cover living expenses and child support. He also claimed that his ex wanted $6,800 for groceries and $7,200 for restaurants. 

Back in July, Griffin filed for divorce from his wife of 11 years, Dias-Griffin, while she was on summer vacation with their three children.

Griffin, 46, is the founder of hedge fund giant Citadel LLC. Dias-Griffin, 44, was born in France. She is the founder of the hedge fund firm Aragon Global Management.

Dias-Griffin later filed a petition seeking equitable division of their assets and sole custody of their children. She asked for their prenup thrown out.Under the terms of the prenup, Dias-Griffin said that she will receive 1 percent of Griffin's assets. Griffin has an estimated net worth of $6.5 billion, according to Forbes.

Griffin and Dias-Griffin were married in Versailles in July 2003. This is the second divorce for Griffin. He divorced his first wife in 1994.

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Ben Bernanke, former chairman of the US Federal Reserve, will become a senior adviser to the hedge fund Citadel Investment Group, The New York Times reported.

Bernanke, who handed the reins of the US central bank to Janet Yellen last year, will offer his analysis of global economic and financial issues to Citadel's investment committees and also meet with the hedge fund's investors around the globe, the newspaper said.

Bernanke's 2006-2014 stint at the US central bank was marked by the brutal financial crisis and a frustratingly slow recovery that prompted him to drive rates to near zero and launch three rounds of bond purchases to stimulate the economy.

Bernanke told The Times that he was sensitive to the public's anxieties about the "revolving door" between Wall Street and Washington and chose to go to Citadel, in part, because it "is not regulated by the Federal Reserve and I won't be doing lobbying of any sort."

Bernanke would be paid an annual fee but would not own a stake in the $25 billion hedge fund or receive a bonus based on its performance. His arrangement with Citadel is not exclusive, and he could take on other consulting roles, the newspaper reported.

Reuters could not immediately reach Citadel or Bernanke for comment outside regular US business hours.

Bernanke last month launched a blog hosted by Brookings Institution, where he is a distinguished fellow in residence. "Now that I'm a civilian again, I can once more comment on economic and financial issues without my words being put under the microscope by Fed watchers," he wrote in his introductory blog post.

Bernanke will remain a full-time fellow at the Brookings Institution, and the new role represents his first somewhat regular job in the private sector since stepping down as Fed chairman in January 2014, the newspaper said.

(Reporting by Supriya Kurane in Bengaluru; Editing by Anupama Dwivedi)

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Ben Bernanke is joining asset manager Citadel. 

In seemingly unrelated news, Citadel's global head of fixed income recently resigned from the firm after losing $1 billion last year. 

According to a report from Bloomberg News, Derek Kaufman resigned from Citadel two weeks ago and a portion of his portfolio was liquidated after he lost $1 billion last year in a "variety of trades." 

Citadel manages $26 billion in assets. 

Bernanke, in contrast, spent last year figuring out what to do after an eight-year stint as chairman of the Federal Reserve. After resurfacing as an economics blogger recently, Bernanke will now join Citadel as an outside senior advisor. 

In a statement, Citadel CEO Ken Griffin said, "[Bernanke] has extraordinary knowledge of the global economy and his insights on monetary policy and the capital markets will be extremely valuable to our team and to our investors."

Maybe Bernanke's "extraordinary knowledge" will help Citadel's bond desk avoid another $1 billion in losses.

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Institutional Investor's annual hedge fund rich list is out.

Last year, the top 25 hedge fund managers took home $11.6 billion in pay.

That's about $467 million per manager.

That's an astronomical figure, of course. But it's also a pretty disappointing one.

$11.6 billion for the top 25 managers is about on par with what they made in 2008, in the midst of the financial crisis.

Hedge fund returns were 3.78% last year— their lowest since 2011, according to research firm Preqin. The S&P gained 13.7 percent, by comparison. Meanwhile, assets under management for many firms have ballooned.

Average earnings for the managers, $467 million, were down from $846 million in 2013, according to the report. Famed activist investor Bill Ackman didn't even make $1 billion.

The highest-earning manager, Citadel's Kenneth Griffin, took home $1.3 billion. Griffin, who has made the list 13 times but never before topped it, earned most of his profits from equity markets.

Following him were Renaissance Technologies' James Simons and Bridgewater Associates' Ray Dalio.

There were some notable names missing from this year's list because they actually lost money, including Discovery Capital Management's Rob Citrone, Omega's Leon Cooperman, Coatue Management's Philippe Laffont, ESL Investments' Ed Lampert, and Paulson & Co.'s John Paulson.

Here's what the top 10 hedge fund managers earned in 2014:

1. Kenneth Griffin, Citadel ($1.3 billion)
2. James Simons, Renaissance Technologies ($1.2 billion)
3. Ray Dalio, Bridgewater Associates ($1.1 billion)
4. Bill Ackman, Pershing Square Capital Management ($950 million)
5. Israel Englander, Millennium Management ($900 million)
6. Michael Platt, BlueCrest Capital Management ($800 million)
7. Larry Robbins, Glenview Capital Management ($570 million)
8. David Shaw, D.E. Shaw Group ($530 million)
9. O. Andreas Halvorsen, Viking Global Investors ($450 million)
10. Charles Coleman III, Tiger Global Management ($425 million)

Read the full report here.

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The Chicago-based hedge fund Citadel has had one of its trading accounts suspended in Shanghai as the Chinese government cracks down on so-called abnormal transactions in its crashing stock markets.

"We can confirm that while one account managed by Guosen Futures Ltd. — Citadel (Shanghai) Trading Ltd. — has had its trading on the Shenzhen exchange suspended, we continue to otherwise operate normally from our offices, and we continue to comply with all local laws and regulations,"Citadel wrote in an email to The New York Times.

The Shanghai Stock Exchange released a statement saying Guosen's account was suspended along with three others "to maintain order in the market and protect investors' interests."

Citadel, which is helmed by billionaire Ken Griffin, has $26 billion worth of assets under management. Guosen Futures is one of its brokerage units.

Chinese stock indices took a nosedive on June 12, and since then Chinese regulators have been taking extraordinary measures to stop the bleeding. They have thrown money at the problem, suspended initial public offerings and new share issues, and promised to go after "malicious" market participants.

On Friday the Chinese government announced it would go after any market participants suspected of spoofing.

Spoofing is a pretty simple form of market manipulation. It is where a trader puts on a huge order, watches the market react, and then cancels the order while also taking advantage of the market reaction its order created.

China's stock-market troubles couldn't come at a worse time.

Over the past year the country's economy has slowed down faster than the government expected as it tries to accomplish the difficult task of changing its economy from one based on investment to one based on domestic consumption. Manufacturing, retail, and other indicators have all been wobbly at best, falling at worst.

There's a lot of rescuing to do.

For the full story head to The Times>

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Citadel founder and CEO Ken Griffin loves McDonald's.

"It drives people nuts that I take them to McDonald's all the time," Griffin said in an interview with The Wall Street Journal's Rob Copeland.

"People have these images of what the successful business person is supposed to act like and be like and so forth," he said.

But everyone around Griffin knows that when he suggests going for a walk, what he really means is a trip to the fast-food restaurant.

Griffin's firm has mounted a strong comeback since its post-crisis lows.

Citadel is now more aggressive than ever, with assets under management soaring to $26 billion, according to the Journal.

Meanwhile, Griffin is going through a nasty divorce from his wife, Anne Dias-Griffin, who is also a money manager.

He filed for divorce while she was on vacation with their children in 2o14.

According to divorce filings, Griffin makes about $100 million a month ($68.5 million after taxes) — or $2.2 million a day.

That is a lot of Big Macs.

Be sure to read The Wall Street Journal profile and Q&A.

SEE ALSO: A giant US hedge fund just had one of its trading accounts suspended in China

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High-frequency traders have moved in on the US Treasury bond market in a big way.

Risk.net just published a confidential list ranking the top 10 firms by volume traded on BrokerTec, an ICAP-owned trading platform for US Treasurys that is believed to make up 65% to 70% of interdealer market volumes.

The data is for May and June.

The top three firms alone — Jump Trading, Citadel, and Teza Technologies — accounted for about $4.2 trillion in volume, according to the report.

Eight of the top 10 firms trading on the platform were not banks, including KCG, Spire-X, XR Trading, DRW and Rigel Cove, according to the report.

The report said: "The BrokerTec client list sheds new light on the extent to which trading activity in the interdealer Treasury market is concentrated with a handful of non-bank firms."

The fresh data on the involvement of high-frequency trading in the Treasury market follows the official report on the October 15, 2014, flash crash in the Treasury market.

That report highlighted the growth in "high-speed electronic trading" and the growing involvement of principal trading firms in the Treasury markets.

Risk noted that the interdealer broker ICAP disputed the data, contending that the volume of trading was overstated.

Here are the top 10 firms:

The full article from Risk.net can be read here. A subscription is required, but there is a free trial available.

SEE ALSO: It looks like banks might have rigged another huge market

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Kenneth Griffin, manager of the Chicago-based hedge fund Citadel, is the likely owner of the single most expensive apartments in New York, Chicago, and Miami, according to The New York Times' Robert Frank.

The hedge fund billionaire bought nearly $300 million worth of real estate in Chicago, New York and Miami, and has broken real estate records in each of the three cities over the past four months.

That includes two floors of Chicago's Waldorf Astoria for a little under $30 million, three floors at New York's "billionaire's bunker" at 220 Central Park South for about $200 million, and Faena House's penthouse in Miami, for $60 million — $10 million above asking price. 

Griffin, who already owns properties in Aspen, Colo. and Hawaii, could be buying the properties as an investment. According to the Times, Griffin has no plans to live in the billionaire's bunker, but plans to use it to house staff or guests, said people familiar with the deal.

Frank cited unidentified people familiar with the transactions, and Griffin declined to comment to the New York Times. The paper noted the purchases coincide with his messy and expensive divorce from wife of 11 years, Anne Dias Griffin. 

The divorce trial is set for Monday. Dias Griffin is reportedly asking for $1 million a month for child support of their two children. 

Griffin earns about $68.5 million a month after taxes, according to court filings for the divorce.

Read the full story at the New York Times.

SEE ALSO: Ken Griffin is closing in on one of the most expensive apartments in New York real estate history

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IEX Group, the stock-trading venue at the center of Michael Lewis' book "Flash Boys," is applying to become a stock exchange, and its rivals are taking shots at it.

The hedge fund and market-making firm Citadel and the big three stock-trading venues — the New York Stock Exchange, BATS Global Markets, and Nasdaq —
have sent letters to the Securities and Exchange Commission questioning some of IEX's central features.

IEX, led by Brad Katsuyama, uses a 350-microsecond "speed bump" designed to level the playing field between hyperfast traders and ordinary traders.

The venue filed to become a stock exchange in September, and firms have been posting their feedback to the SEC since then. All of the feedback is available here.

In a letter published by the SEC on Thursday, the New York Stock Exchange said:

The nature of the IEX application is concerning to us, however. Like the "non-fat yogurt" shop on Seinfeld, which actually serves tastier, full-fat yogurt to increase its sales, IEX advertises that it is "A Fair, Simple, Transparent Market," whereas it proposes rules that would make IEX an unfair, complex, and opaque exchange.

Several of the issues raised are particularly technical, focusing on the finer details of the IEX application. One recurring issue, however, is the very thing that gained IEX notoriety: the speed bump.

The NYSE said the IEX speed bump would "result in the investors receiving stale and misleading quote information." That echoed earlier feedback from Citadel, which said some of IEX's unique features would negatively affect the wider market.

Citadel is a big market maker, accounting for over 14% of US-listed share-trading volume and over 20% of all US-listed equity-options volume.

Speed bump

In its letter, Citadel said share prices could move during the 700 microseconds it takes for a bid or offer to hit the IEX system and come back. And when prices are changing that fast, the IEX's quotes for a stock would be "stale," which could keep people from trading at other exchanges too.

It also said IEX wanted to allow some people to circumvent the speed bump. It said:

It is ironic that IEX — a company supposedly founded to protect investors from various types of latency arbitrage — now proposes to offer pegged orders and IEX Router services that can and will be used by sophisticated trading firms to arbitrage the latency that IEX itself would create.

To make matters worse, although IEX markets itself as a bastion of transparency and fairness, IEX has chosen to remain opaque with respect to critical information about how it will operate. The Application does not explicitly and clearly describe either of these important and selective speed advantages, and other important aspects of IEX’s planned operation.

It added later in the filing:

We are deeply concerned about the negative impact that the proposed IEX structure would have on retail and institutional execution quality, and overall market quality.

The feedback is in contrast to investor responses to IEX's filing. Business Insider reported in October that some of the biggest investors in the business have endorsed the application.

Since then, the fund manager OppenheimerFunds has supported the application, while Virtu, a leading market maker and liquidity provider, said IEX's "speed bump"had no impact on its market making on the platform.

A spokesman for IEX said: "We are reviewing all letters submitted on our Form 1 and look forward to submitting our response letters to material comments, including clearing up any confusion about how our market works, during the review period."

"Our first response letter will address material comments received by the submission deadline of November 6," he added, "and we will submit a follow-on response letter to address material comments received thereafter."

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Twenty-five years ago, Ken Griffin launched his hedge fund in his Harvard dorm room.

Griffin now has a net worth of $7 billion, and Citadel, the hedge fund giant he started, employs 1,600 people and has $26 billion in assets under management.

In an interview with CNBC's Kate Kelly on Thursday, Griffin talked about what it took to get a job at his firm.

He noted that Citadel planned to interview 10,000 candidates this year to fill 300 job openings.

"I think Harvard is a bit easier to get into," he said. "I think the upside at Citadel is a bit better."

Harvard has a 6% acceptance rate, according to US News & World Report. Based on Griffin's numbers, Citadel has a 3% acceptance rate.

Griffin has been a huge supporter of his alma mater. Last year, he made a $150 million donation to the school.

Griffin explained that when making a hire he wanted to bring on the "best and brightest in markets."

"So one of the great advantages that I had in my career is I started trading 24 hours a day in my early 20s, and I had to learn to delegate to people," he said. "I had to learn to trust people, and I realized that success was going to be born in hiring really bright people — very self motivated, very able to make good judgment calls day in and day out.

"And if you look at Citadel today, that's really the founding principle of the firm is a real pursuit of talent, a pursuit of people who have a passion for finance, and a pursuit of individuals who make good decisions day in and day out."

Watch below:

SEE ALSO: Billionaire hedge fund manager Ken Griffin loves McDonald's

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Twenty-five years ago, Ken Griffin launched his hedge fund in his Harvard dorm room.

Griffin now has a net worth of $7 billion, and Citadel, the hedge fund giant he started, employs 1,600 people and has $26 billion in assets under management.

In an interview with CNBC's Kate Kelly on Thursday, Griffin talked about what it took to get a job at his firm.

He noted that Citadel planned to interview 10,000 candidates this year to fill 300 job openings.

"I think Harvard is a bit easier to get into," he said. "I think the upside at Citadel is a bit better."

Harvard has a 6% acceptance rate, according to US News & World Report. Based on Griffin's numbers, Citadel has a 3% acceptance rate.

Griffin has been a huge supporter of his alma mater. Last year, he made a $150 million donation to the school.

Griffin explained that when making a hire he wanted to bring on the "best and brightest in markets."

"So one of the great advantages that I had in my career is I started trading 24 hours a day in my early 20s, and I had to learn to delegate to people," he said. "I had to learn to trust people, and I realized that success was going to be born in hiring really bright people — very self motivated, very able to make good judgment calls day in and day out.

"And if you look at Citadel today, that's really the founding principle of the firm is a real pursuit of talent, a pursuit of people who have a passion for finance, and a pursuit of individuals who make good decisions day in and day out."

Watch below:

SEE ALSO: Billionaire hedge fund manager Ken Griffin loves McDonald's

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"Star Wars: The Force Awakens" debuted on Friday and shattered box-office records.

Citadel's Stephen Parlett, Evan Ericson, Joe Pasqualichio, and Steven Rosenberg laid out their thoughts on the film — and on predicting financial success in movies — in a Q&A session.

Citadel, founded and led by Ken Griffin, has $25 billion in assets under management.

"Our models are built to be extremely dynamic and flexible," Parlett said when asked how Citadel calculated the likelihood of a movie's success and how the firm could change its models when needed.

"In the entertainment industry something can be a hit or a flop; the numbers can change rapidly, and our flexibility enables us to react incredibly fast" he said.

Rosenberg said Citadel spends a lot of time conducting research to better understand consumer trends. He said:

We perform a lot of proprietary research and data analysis. For example, we survey thousands of gamers every year to understand consumer trends, test hypotheses and gauge purchase intent for upcoming titles into the holiday season.

Unsurprisingly, this year's video game survey showed strong purchase intent for Star Wars: Battlefront. But if you dig a little deeper into the numbers, you start to discover some interesting trends about how and where consumers plan to make their purchases. All that will have an impact on the game publisher's gross margins.

Parlett added that "not all revenues are created equal," meaning Citadel needs to understand "the underlying costs or revenue sharing that are associated with a content company's revenues."

Pasqualichio said:

It's important to remember that the total revenue generated from a film will include more than just the theatrical release, as Stephen mentioned. Films use the ultimate method of accounting which includes revenue streams beyond the initial theatrical release.

When a film is created, there is a major fixed cost associated with its production. That production cost will be amortized over the life of the film based on how much it generates at the box office, in the premium TV window, in the basic TV window, and how much it generated from consumer products and other ancillary revenues.

Read the full Q&A transcript here.

Here's part of that conversation:

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"Star Wars: The Force Awakens" opened last week and looks set to dominate the box office this month.

The film is the seventh in the "Star Wars" series, and it represents part of a growing trend in Hollywood for blockbuster franchise movies.

Citadel's Stephen Parlett, Evan Ericson, Joe Pasqualichio, and Steven Rosenberg laid out their thoughts on the movie business in a recent Q&A session.

Citadel, the hedge fund founded and led by Ken Griffin, has $25 billion in assets under management.

Pasqualichio was asked what impact flops had on movie studios. His answer reveals a great deal about why movie studios are going down the franchise route.

In short, they want to minimize their risk, appeal to an international audience, and bolster the potential for additional revenues through games and merchandise. That sounds like a no-brainer, and it probably won't come as a surprise to regular filmgoers.

Still, his explanation is a simple distillation of what is going on in Hollywood right now. He said:

There's a saying in Hollywood that "nobody knows nothing." So it's really hard to predict what's going to resonate with the public and what's not. I think a studio would probably be happy batting .500 on hits and misses, but it's really important to get the big bets right. So you had John Carter, a film with an approximate production budget of $250 million that ultimately lost around $200 million. Lone Ranger was another big miss.

Box office flops are going to come up from time to time, but your big bets, and especially the ones with IP backing them, should be enough to cover them. And that's why you're seeing studios move towards IP and franchise films like the Harry Potter series, where you had eight films that generated $7.7 billion over the full run. Those big hits will be able to absorb the losses from the John Carter s. Today, more than ever we're seeing this blockbuster strategy at studios where they rely on really big, tent-pole films – like the Star Wars movies – to generate sufficient profits that cover all of the misses and make the overall slate profitable.

And here he is on the globalization of the movie business:

Above all, this industry is going to continue to get more global. The focus is going to become more on what does the Chinese consumer want, what does the Latin American consumer want? A truly global blockbuster requires very high production value, very recognizable IP, and a plot that appeals to the entire globe.

Read the full Q&A transcript here.

Here is the video:

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Citadel, the $25 billion Chicago-headquartered hedge fund led by Ken Griffin, fell 8% this year through March 11, Bloomberg News reports, citing sources familiar with the matter.

Hedge funds on average have fallen 3.08% this year, according to Hedge Fund Research.

Citadel uses a multimanager structure in which several portfolio managers run independent funds with different strategies. Multimanagers are known for having strict risk constraints for their portfolio managers.

About three quarters of the fund's losses came from the fund's Surveyor Capital arm, the Bloomberg report said.

The Wall Street Journal reported last month that the Surveyor arm cut about a dozen of its 200 employees after experiencing losses at the beginning of the year. The unit also replaced its longtime head, Jon Venetos, back in January.

Surveyor runs a global long/short equity multimanager strategy with portfolios organized by sector groups.

"Surveyor Capital portfolio managers use a fundamental, bottom-up research process, primary due diligence and intensive modeling to construct portfolios that focus on alpha generation while remaining beta-neutral,"according to Citadel's website.

Citadel declined to comment.

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