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A Microsoft exec is making a surprise move to Wall Street, and it highlights how trading is changing

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Kevin Turner Citadel

Global securities firm Citadel has hired a new key executive — from Microsoft.

B. Kevin Turner, who was chief operating officer of Microsoft for 11 years, has joined Citadel as CEO of Citadel Securities, the hedge fund's market making business, and vice chairman of Citadel.

"Kevin is a proven innovator who brings expertise in technology and operations with a client-first focus," Citadel founder and CEO Kenneth Griffin said in a statement.

Before Microsoft, Turner spent nearly two decades at Walmart, where he worked his way up from a cashier to chief information officer and later president and CEO of the Walmart-owned retailer Sam's Club.

"There is this real passion that Ken and the company has to build the most successful hedge fund and securities firm in the world — I love to work for companies that want and aspire to be the best," Turner said in a video interview with Citadel.

Citadel Securities provides automated market making and execution services. It trades products including equities, equity options, and interest rate swaps for retail and institutional clients.

Last year, it ranked second on a list of 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. It is the largest designated market maker on the New York Stock Exchange, and recently acquired the equity-trading operations of Citigroup’s Automated Trading Desk division.

Turner's hire comes at a time when technology is a much bigger part of the financial system. Six of the top eight hedge fund firms are quants, or managers who rely on computer programs to guide their investing.

The vast majority of stock trading is now completed electronically. Tech-driven high-frequency trader firms now dominate the US Treasury market. Goldman Sachs and JPMorgan have described themselves as technology companies.

He is the latest executive to make the jump from a technology company to a financial firm. Bridgewater in March hired computer scientist Jon Rubinstein as co-CEO, replacing longtime Bridgewater executive Greg Jensen in that role. Rubenstein spent nearly 16 years working alongside Steve Jobs, first at NeXT and then at Apple.

"I'm a competitive person by nature, and I have been in competitive companies, and I love to compete — joining a company where, certainly, there is a real fire in the belly to compete and bring that energy is something I look forward to," Turner said.

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A Wall Street CEO who started out as a Walmart cashier shares his best careers advice

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Kevin Turner, Citadel Securities

Kevin Turner is on the move.

The former Microsoft chief operating officer is joining Citadel Securities as chief executive officer.

He will also be the vice chairman of parent company Citadel, which manages $24 billion as of June.

Prior to Microsoft he worked his way up at Walmart, starting as a cashier while in college and later becoming CIO responsible for many of the company's industry-setting technology initiatives. He later became CEO of Sam's Club.

In a video by Citadel Securities released Thursday, Turner revealed the one thing he has learned over his varied career. 

"I learned a long time ago, it's not the people you work for that determines your success, it's the people you work with," he said. "And being able to get the very best out of them I think is critical from my standpoint."

Here is Turner (emphasis ours):

"We all work very very hard in business. When you think about business in that aspect, there's lots that goes on in the day. There are lots of meetings, celebrating of results, challenging performance...there are lots of tactics that goes into a business model. When our work is done, the one thing that we're going to remember and hopefully be remembered for, was our relationship with other people. And having that bond with other people and inspiring them to do their very best work, is what I aspire to do at Citadel."

Here's the video:

 

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The hedge fund at the heart of an insider-trading scandal is winding down a key fund

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Ken Griffin

A big hedge fund transaction is hanging in the balance.

Visium Asset Management, a hedge fund at the heart of an insider-trading scandal that has outlined plans to shut down, in June inked a deal to sell one of its funds to AllianceBernstein.

Visium told investors on Wednesday that it will now unwind that fund, according to a person familiar with the matter, putting that transaction in doubt.

The firm is also changing its auditor to PKF O'Connor Davies from KPMG, the person said.

Visium Asset Management said that it would shut down after regulators said last month that several Visium employees had allegedly committed fraud and insider trading.

AllianceBernstein, which manages $487 billion, had been planning to buy one of Visium's main hedge funds, a global equity-focused fund that is not the target of regulators' inquiries.

Questions had been swirling around the proposed deal for some time. One person familiar with the matter said that the global fund had been expected to drop significantly in assets as investors yanked their money from the fund. It managed more than $2 billion as of earlier this year.

Several of its key portfolio managers also had left even before the proposed deal was announced, including Rohit Shah, who is moving to Caxton Associates, and Arnaud Saint-Sauveur, who is set to move to Lombard Odier, people familiar with the matter previously told Business Insider.

Visium previously had a stringent non-compete policy for its employees who wished to work at competing firms, but had been loosening those terms ever since the firm came under fire, people familiar with the matter said.

That's a departure from last year, when Michael Kestenbaum, a portfolio manager on the global fund, looked to move to competitor Folger Hill and filed a suit against Visium to get out of his non-compete, according to public filings.

On Wednesday, Rob Copeland and Sarah Krouse at The Wall Street Journal reported that Ken Griffin's Citadel has hired 17 portfolio managers from Visium. They could start as early as August, according to the report.

Visium's global fund has been down this year, alongside the firm's flagship healthcare hedge fund. Through June 30, the global fund is down 4.85%, according to an investor update seen by Business Insider. The healthcare fund, Visium Balanced, which is the target of the insider-trading investigation, is down 10.75% over the same period.

Business Insider also reported this week that someone is trying to sell an investment in Visium's Balanced fund.

Representatives for Citadel did not respond to requests for comment. A representative for AllianceBernstein declined to comment on the state of the deal.

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Ken Griffin's $26 billion firm has made a hire from a struggling hedge fund

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Ken Griffin

A struggling hedge fund has lost a portfolio manager to Ken Griffin's $26 billion Citadel.

The portfolio manager, Jennifer Pollak, is moving from Folger Hill Asset Management to a Citadel stock-picking unit, Aptigon Capital. Citadel confirmed the hire. 

Folger Hill, founded by ex-SAC Capital chief operating officer Sol Kumin, was down about 15% last year through November in its main fund, and earlier in 2016 lost about a third of its assets, Reuters reported.

The firm managed about $1 billion as of mid-2016, according to the Hedge Fund Intelligence Billion Dollar Club, and assets fell to about $600 million just three months later, according to Reuters. The firm now manages more than $1 billion, according to a person familiar with the matter. 

Pollak is the first portfolio manager to voluntarily leave the firm, according to a separate person familiar with the matter.

Last year, Citadel's Aptigon unit poached about 17 portfolio managers from Visium Asset Management amid an insider-trading scandal, imperiling a potential sale to another asset manager.

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One of Ken Griffin's senior staffers has left hedge fund giant Citadel

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Ken Griffin

One of Ken Griffin's portfolio managers has left Citadel, the $26 billion hedge fund titan, according to people familiar with the matter.

Karl Kroeker, who specialized in tech, worked nearly 14 years at Citadel and left earlier in February, according to one of the people. He was a portfolio manager in Citadel's Global Equities unit in San Francisco and has not yet been replaced, the person said.

The move follows Citadel shutting its Ravelin stock-picking unit, which was also based in San Francisco, earlier this year, and merging the teams within the unit with Global Equities.

“Citadel has decided to consolidate Ravelin Capital into our Citadel Global Equities business," a spokesman for Citadel told Business Insider at the time. "This decision will further strengthen Global Equities by incorporating the best ideas and strongest talent from Ravelin.”

Three units remain at Citadel: Surveyor, Global Equities and Aptigon.

Citadel, which is headquartered in Chicago and was founded by billionaire Ken Griffin, is one of the US' biggest hedge fund firms. The company managed $24 billion as of mid-year 2016, according to the Hedge Fund Intelligence Billion Dollar Club ranking. The firm now manages about $26 billion, one of the people said.

Kroeker couldn't immediately be reached for comment.

SEE ALSO: Ken Griffin has shut down one of Citadel's stock-picking units

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KEN GRIFFIN: 'Our entire country is built on the work ethic of immigrants'

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Ken Griffin

LOS ANGELES – Citadel's Ken Griffin says he is "terrified" about the political hardline against immigrants in the US.

Speaking at the Milken Institute Global Conference held at the Beverly Hilton, the hedge fund billionaire said that several senior execs at his $27 billion firm are immigrants.

"They came here for their education, they put down roots here, and this is where they had their families and careers," Griffin said at the Milken conference on May 1. "They're incredibly driven."

"I am terrified because our entire country is built on the work ethic of immigrants," Griffin added.

Citadel, one of the world's biggest hedge fund firms, is based in Chicago and has offices globally. 

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A hedge fund billionaire says Chicago's roads are 'borderline third world'

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Ken Griffin

LOS ANGELES – Hedge fund billionaire Ken Griffin said he finds US infrastructure a disgrace. 

Speaking at the Milken Institute Global Conference held at the Beverly Hilton, Griffin described how he finds driving in Chicago, where his fund, $27 billion Citadel, is based.

"It’s a borderline third world country," he said. "It’s a disgrace. It’s simply wrong."

The billionaire also said the US needs to address its airports and its electrical grid, by implementing lower cost of production.

Griffin also said he is concerned about a disparity in access to technology between the rich and the poor.

"If you grow up in the inner city of Chicago and don't have access to Google as a young boy or girl, that puts you at a big disadvantage," he said.

Griffin also said that he was bullish on the Trump administration's pitch to deregulate industries like energy and financial services, and its push for tax reform.

However, he also flagged concerns about the administration's rhetoric on immigration. He said he was "terrified" since many of his hedge fund's senior staffers were born outside the country.

Citadel, one of the world's biggest hedge fund firms with $27 billion, is based in Chicago and has offices globally. 

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The Trump administration hired an official who was accused of sexually assaulting five students

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Donald Trump

A political appointee hired by the Trump administration for a significant State Department role was accused of multiple sexual assaults as a student several years ago at The Citadel military college.

Steven Munoz was hired by the Trump administration as assistant chief of visits, running an office of up to 10 staffers charged with the sensitive work of organizing visits of foreign heads of state to the U.S. That includes arranging meetings with the president.

At The Citadel, five male freshmen alleged that Munoz used his positions as an upperclassman, class president and head of the campus Republican Society to grope them. In one incident, a student reported waking up with Munoz on top of him, kissing him and grabbing his genitals. In another, on a trip to the Conservative Political Action Conference in Washington, D.C., a student said that Munoz jumped on him in bed and he “felt jerking and bouncing on my back.”

An investigation by The Citadel later found that “certain assaults likely occurred.” A local prosecutor reviewed the case and declined to seek an indictment.

Munoz’s hiring raises questions about the Trump administration’s vetting of political appointees, which has been both slow and spotty, with multiple incidents of staff being fired only weeks into their jobs, including for disloyalty to Trump. The White House didn’t respond to a request for comment.

Munoz, a Miami native, worked as a political consultant in South Carolina after graduating from The Citadel in 2011. He was publicly reported to be under investigation the following year around the time he was working for Rick Santorum’s presidential campaign. Stories from that time, which outline some but not all of the allegations against Munoz, are easy to find via a simple Google search.

Details of the case, drawn from an extensive, previously unreported police case file, also raise questions about The Citadel’s response to the alleged string of assaults, according to experts in campus sexual assault. After one student reported to a school official in 2010 that Munoz had sexually assaulted him, The Citadel didn’t discipline Munoz. Instead, it gave him a warning.

Over the next year and a half, Munoz allegedly assaulted four other students. Those incidents weren’t reported until well after Munoz graduated in 2011.

Steven MunozMunoz referred questions to his lawyer, the prominent Charleston defense attorney Andy Savage, who denied the allegations. “I believe that certain disgruntled cadets made exaggerated claims of wrongdoing concerning Munoz’s participation in boorish behavior that was historically tacitly approved, if not encouraged, by the Institution,” Savage said. 

Upon graduation, The Citadel gave Munoz an award for “leadership, sound character and service to others.” The citation said he could “always be counted upon to help classmates who need assistance and to mentor younger cadets adjusting to life at The Citadel.”

A Citadel spokeswoman, Kim Keelor, said the committee that gave the award would not have known about the 2010 allegation because of privacy law. Keelor said of the case overall: “The college proceeded thoughtfully in addressing the reports in accordance with its policy and related processes, and with great concern for those involved and the protection of their privacy.”

When more students came forward the year after Munoz graduated, The Citadel banned him from campus and referred the case to state police, who did an extensive investigation.

When The Citadel later conducted its investigation, it interviewed complainants and witnesses and concluded in 2014 that assaults occurred “based upon a ‘preponderance of evidence,’” according to a statement from the school to ProPublica.

The Citadel is a storied public college based in Charleston, South Carolina, where students, known as cadets, get military instruction as well as traditional coursework. Many join the armed services after graduation.

Freshman are dubbed “knobs” for their shaved haircuts. They go through what the school refers to as “strict indoctrination.” They are subordinate to upperclassmen. There have been repeated hazing problems for many years, and there was a major scandal involving sexual abuse at the school’s summer camp in the mid-2000s.

Citadel cadetsThe students who accused Munoz of assaults say that he abused his power as an upperclassman and student leader.

Here is what one Citadel student told police about his encounters with Munoz in 2009 and 2010 during his freshman year:

“Munoz coerced threatened and convinced me to allow inappropriate touching, grabbing, and kissing by leading me to believe it was what I needed to do to gain acceptance in the corps of cadets. He threatened to call my upperclassmen who would be upset if I did not comply with him.”

The student told police he and Munoz would sometimes return to campus early and stay at the home of a Citadel professor, where “during the night Munoz would enter my room and continue the touching.”

Another student who was a freshman in 2011 traveled with Munoz, then a senior, as part of the Republican Society trip to the annual CPAC event in Washington. The student later said in a statement to police that Munoz had jumped on him two times. In one incident, after the freshman was caught with alcohol, Munoz informed the younger student that he would not be citing him for the violation, then came into the freshman’s hotel room:

“I was groggy, [Munoz] jumped on me, I felt jerking and bouncing on my back, I threw my elbow up which threw him off the bed to the floor.”

A third student, who met Munoz through the Republican Society, described Munoz setting up a series of meetings with him alone in Munoz’s room to talk about how to get leadership positions in campus organizations.

“He instructed me to sit on his bed during these meetings. … After a few meetings he began to rub my leg with his hand. He moved his hand under my shorts and the first time I pushed his hand off my leg he said he was just playing and that he did it with his other knobs so I shouldn’t mind. I had seen this in the past and when I asked my classmates about the interaction, they said when they resisted, he yelled at them for not trusting him and Mr. Munoz made them stay longer in his room.”

In another meeting, Munoz “put his other hand down my underwear until I again pushed him away, but he did not stop. He said as a new leader I had to learn to trust other leaders on the team and this was how I should show him I trusted him.” Munoz said “he read the Bible and knew what it said and I should not question his love of God. He continued to rub my leg and rub my private area. … He said this needed to stay between us and dismissed me.”

The first incident reported to the school took place in April 2009. As later recounted by a state police investigator, Munoz, then a sophomore, and a freshman were at an off-campus house watching TV and consensually spooning. The freshman later woke up in the middle of the night, “thinking he was having a wet dream, but it was Munoz on top of him with fully body contact, kissing him with his tongue in his mouth. Munoz had his left hand down [the other student’s] shorts touching his penis.”

The following year, in February 2010, the student reported that incident to a Citadel official, Sexual Assault Response Coordinator Janet Shealy. The reporting student told Shealy he didn’t “want to do anything but informal,” according to her notes.

Rick SantorumSchool officials set up a mediation session in which Munoz and the other student met in a conference room. In that meeting, according to Shealy’s notes, Munoz “said it was consensual and that accuser started it.” The other student left “upset,” saying that Munoz had “lied.”

Shealy and another Citadel official, Col. Christopher “Hawk” Moore, met with Munoz again to tell him there would be no disciplinary action taken. Munoz was warned and told to write a statement about what happened.

Experts on campus sexual assault questioned how The Citadel handled that initial report.

“The school has the responsibility to keep people safe on campus,” said Colby Bruno, an attorney at Victim Rights Law Center. “The school should have investigated this more thoroughly. Instead of investigation they went to this mediation.”

Bruno pointed out that the federal government’s guidance on how schools should respond to sexual assault under federal civil rights law explicitly says that even voluntary mediation is not appropriate in assault cases.

“Sexual assault is about power and control,” Bruno said. “You can’t sit two people down who have an imbalance of control and power to have a balanced mediation.”

Citadel spokeswoman Keelor said in a statement that the school’s policy on mediation differs from the federal guidance “because it was developed under the direction of the Department of Justice and the federal courts during the school’s transition to coeducation” in 1996.

Keelor said after the 2010 assault report “the college conducted an investigation.” She said the school could not give details about any specific case. But she said in a statement that generally an “informal investigation” would include interviewing both students and providing options for support services. The statement also details how the Citadel requires sexual assault prevention classes for each year of a student’s time at the school.

Shealy, The Citadel’s sexual assault response coordinator, declined to comment.

Citadel Charleston South CarolinaBruno said a thorough investigation would include speaking to potential witnesses or people who had seen Munoz or the other student soon after the alleged assault.

When more students came forward in fall 2012 — more than a year after Munoz graduated — The Citadel referred the case to the state police, the South Carolina Law Enforcement Division. The school also sent a campus-wide email notifying students of the allegations and banned Munoz, then an alumnus, from campus.

One student said in a statement to campus police that he had come forward so long after what happened because he had heard of other incidents and “I want this school to be safe from sexual predators.”

Over the course of several months, police interviewed the five alleged victims, who said they were willing to press charges. (None of them responded to our requests for comment.) The incidents were classified variously as forcible fondling, sexual battery and simple assault.

In March 2013, the state police referred the case to the office of the Charleston County prosecutor, Solicitor Scarlett Wilson. A week after receiving the nearly 200-page case file, the prosecutor said in a letter to police that her office would not seek indictments against Munoz because “there is no probable cause that he committed a crime prosecutable in General Sessions Court.”

Wilson’s office did not respond to requests for comment.

In 2014, according to The Citadel, Munoz requested that the school review its decision to ban him from campus. That’s when the school conducted its own investigation and found that “certain assaults likely occurred.”

Later that year, the school partially rescinded the no-trespass order, “permitting general access to public facilities and events, but no direct cadet interactions.” Asked why, the school pointed to the prosecutor’s decision not to seek indictments.

Savage, Munoz’s lawyer, said in his statement: “Steven Munoz, a graduate of the Corp with a sterling reputation for honesty, integrity and all Corp values, was used as a whipping boy in an attempt by the institution to change its shameful image shaped by its ignorance of the conduct of Skip ReVille and Michael Arpaio.” ReVille and Arpaio were at the center of widely covered Citadel sexual assault and child abuse scandals.

At the time two of the allegations against Munoz surfaced in 2012, Savage told The Post and Courier newspaper that the allegations were not only false, but also politically motivated. Savage claimed that an unnamed Citadel employee — who was also the mother of one of the alleged victims — had released information on the allegations because she disliked Munoz’s conservative politics. Savage declined our request to provide details to substantiate his claim.

Savage also criticized the investigation of the case, saying that “several cadets complained that they were being pressured to provide misleading statements.” They were “pressured to report interactions that the cadets considered typical barracks banter as if they felt it was inappropriate,” he said.

When asked for details, Savage provided the name of one student, who Savage said was a witness, not a victim. The student is not cited as a witness in the nearly 200-page police case file, and was not immediately available for comment.

Savage also criticized the school’s investigation, saying he was not given enough time to provide witnesses or statements.

Since Munoz graduated, he has been president of a Charleston-based political consulting firm called American Southern Group, according to his LinkedIn profile. The Trump campaign paid the firm tens of thousands of dollars for “event consulting,” according to disclosure filings.

Munoz was then hired to work on Trump’s inaugural committee.

He joined the State Department on Jan. 25, a spokesperson confirmed. The agency declined to comment further.

During the Obama administration, vetting of potential political appointees like Munoz was extensive. A possible hire would be thoroughly examined by the White House Office of Presidential Personnel before being offered a job. That would include everything from a Google search to running a person’s name through criminal records and news databases.

Any significant negative media reports or criminal accusations would lead a file to be flagged for further scrutiny by White House lawyers, according to a former staffer in the office who vetted Obama appointees. Sexual assault allegations would be a serious flag. In the Obama years, candidates under consideration for jobs were passed over because of, for example, a drunk driving case or for being a registered lobbyist.

President Trump’s personnel office is being run by a former Republican Capitol Hill staffer, Johnny DeStefano. But not much is known about how the office checks the backgrounds of political appointees. The White House didn’t respond to a request for comment about details of its vetting process.

Timeline

April 2009: Alleged assault of Student #1 occurs.

November 2009-May 2010: Alleged assaults of Student #2 occur.

February 2010: Student #1 reports assault to The Citadel.

February-March 2010: School officials meet with Munoz and Student #1 for mediation. Officials warn Munoz but take no disciplinary action.

April 2010: Alleged assault of Student #3 occurs.

February 2011: Alleged assault of Student #4 occurs.

March-April 2011: Alleged assault of Student #5 occurs.

May 2011: Munoz graduates.

September 2012: After receiving more reports of past alleged assaults, The Citadel refers case to state police. The school bans Munoz, now an alumnus, from campus.

March 2013: After an investigation of over five months, state police send case file to the office of the prosecutor, Solicitor Scarlett Wilson.

March 2013: Prosecutor declines to seek indictments.

2014: Munoz requests that school review no trespass order. The Citadel “conducted an investigation, interviewing complainants and witnesses. Based upon a ‘preponderance of evidence,’ it was concluded that certain assaults likely occurred,” according to a spokesperson.

Later in 2014, the no-trespass order was partially rescinded, allowing Munoz to attend public events at the college, but limiting interactions with students.

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A 12,000-Year-Old Turkish citadel is about to be washed away on purpose

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Hasankeyf is an ancient town and district located along the Tigris River in the Batman Province in southeastern Turkey.

The Hasankeyf citadel has, at different times, been a part of the Roman, Byzantine, Arab, Mongol, and Ottoman Empires.

A new major infrastructure project threatens one of the most impressive ancient sites in the world.

The Hasankeyf citadel in southeastern Turkey has been standing since the Middle Bronze Age and is some 12,000 years old. At different times, Hasankeyf been part of the Roman, Byzantine, Arab, Mongol, and Ottoman empires. Replete with caves, spires, and ancient buildings, Hasankeyf remains a beautiful connection to a distant past.

However, The Guardian reports that construction of the Ilisu Dam on the Tigris River is on the verge of raising water levels in the area and flood the citadel and 80% the city it was once part of.

This dam, part of the larger Southeast Anatolian project, has been in planning since the 1950s, but recently Turkish authorities have begun to demolish nearby cliff faces around the ancient city for "safety reasons."

Remains of the ancient town of Hasankeyf on the River Tigris, in Hasankeyf, Turkey.

Beyond the damage to this landmark, as well as countless other unexplored historic sites the dam is projected to flood, this dam will displace around 80,000 people, most of them Kurds, who still live around and in this long-standing city.

The dam will also severely change the delicate microclimates of the Tigris river basin, throwing the many endangered and threatened species that reside there in danger of extinction. This environmental damage will not stop at the Turkish border, and will have catastrophic effects on the biosphere of other nations that the Tigris runs through, cutting off their access to the free-flowing waters.

News of the ecological and historical damage that this dam will cause has already lead to numerous countries withdrawing funding for the project, including Germany, Austria, and Switzerland who pulled their funding in 2009.

The Ilisu Dam will undoubtedly cause devastating ecological, communal, political and historical damage to the area.

Nevertheless, the Turkish government is going through with the project in the pursuit of creating this large hydroelectric dam. Officials claim it will bring vital industry to a neglected section of the country, but many independent estimates believe that the dam may cause a net negative for the region, with the societal and economic costs of the mass displacement of the region's inhabitants.

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There has been a big shake-up at Citadel's Aptigon unit

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Ken Griffin

There has been a shake-up at one of the billionaire Ken Griffin's stock-picking units.

Rich Schimel, who headed Aptigon, a unit of the $27 billion hedge fund Citadel, and David Bonfili, formerly Aptigon's chief operating officer, have left, a spokesman for Citadel told Business Insider in an email.

"Eric Felder has been named Head of Aptigon Capital and Reza Shahi will assume COO responsibilities for the business," the spokesman said, adding that the changes were made "to strengthen the platform and drive investment performance." The spokesman added that Citadel had "parted ways" with several other Aptigon investment staffers, but he did not say who.

Felder joined Citadel last May to launch the Fundamental Strategies unit, and he later took on the firm's Global Credit business, per the spokesman. Felder will continue with these roles in addition to heading Aptigon.

The departures mark a sharp turnaround for Aptigon, which launched in 2016 with Schimel at the helm. At the time, Schimel went on a hiring spree from the fallen rival Visium Asset Management, bringing on 17 portfolio managers for the unit, The Wall Street Journal reported at the time. Schimel previously cofounded Diamondback Capital.

The spokesman said: "We are committed to the success of Aptigon Capital, and we will continue to recruit leading talent to the team."

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Citadel portfolio manager Gupta has left a new investment group after less than a year on the job

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Ken Griffin

  • Neel Gupta, a portfolio manager at Citadel's Fundamental Strategies unit, has left.
  • Gupta had joined Citadel less than a year ago from Pine River Capital.

A portfolio manager who was part of Citadel's burgeoning Fundamental Strategies group has left less than a year on the job.

Neel Gupta recently left Citadel, people familiar with the matter said. 

In September 2017, Gupta joined Citadel's Fundamental Strategies group as an equities portfolio manager from Pine River Capital, where he focused on event-driven equities, Business Insider earlier reported.

The group is headed by Eric Felder, who was hired from Magnetar last year. The team, which invests across various asset classes, has grown to 20 investment professionals since launching last year.

The reasons for Gupta's departure are unclear. Gupta declined to comment.

Citadel's flagship Wellington fund gained 2.5% in April and about 7% year to date through April after fees, a person familiar with the numbers said. The flagship fund encompasses performance from multiple units at Citadel.

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2 senior traders are back at Goldman Sachs in one the hottest corners of the market after a stint at hedge fund Citadel

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Goldman Sachs CEO David Solomon

  • Two top equity-derivatives traders have returned to Goldman Sachs after a short stint as portfolio managers at Citadel.
  • Chad Barrs and Travis Chmelka left Citadel around August after a year and half and rejoined Goldman in November as managing directors in single-stock volatility trading, according to people familiar with the matter.
  • The return of volatility in 2018 led to huge gains on Wall Street equities desks and made equity derivatives one of the fiercest talent battlegrounds.

In early 2017, two long-time Goldman Sachs traders moved to the buy-side, joining hedge-fund behemoth Citadel as portfolio managers. Now they're back at Goldman as managing directors in equity derivatives — one of the hottest markets on Wall Street in 2018.

Goldman traders Chad Barrs and Travis Chmelka spent about a year and a half as equity-derivatives focused portfolio managers at Citadel before leaving around August. They rejoined Goldman in November as managing directors on the single-stock volatility desk, according to FINRA records, their LinkedIn profiles, and people familiar with the matter. 

Both Barrs and Chmelka joined Goldman out of college in the mid-2000s and have spent most of their careers trading stock derivatives for the firm, outside of the brief foray at Citadel, according to their LinkedIn profiles. 

Representatives from Goldman Sachs and Citadel declined to comment.

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As volatility surged back into the markets in 2018 and revived Wall Street stock-trading desks, equity derivatives became a fierce battleground for talent.

After a dismal 2017, the big five US banks each saw significant increases in equities sales and trading last year, collectively growing revenues 17% to $31.8 billion, according to publicly available data. Goldman increased equities revenues 15% to $7.6 billion.

Through the first three quarters of 2018, derivatives revenues posted the most significant gains within equities at Wall Street's top banks, up 26% compared with 2017, according to industry consultant Coalition. 

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Billionaire Ken Griffin just bought a $238 million penthouse — and it's the most expensive home ever sold in the US

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Billionaire hedge-fund manager Ken Griffin just paid $238 million for a New York City penthouse, breaking the record for the most expensive home ever sold in the US, The Wall Street Journal reported. 

The transaction smashed the previous record, set in in 2014 when another hedge-fund manager, Barry Rosenstein, bought a Hamptons home for $137 million, by more than $100 million.

Griffin's new Manhattan penthouse is a massive 23,000-square-foot residence that encompasses floors 50 through 53 at 220 Central Park South, a skyscraper designed by Robert A.M. Stern that's still under construction. The asking price was $250 million, according to The Real Deal.

A spokeswoman for Griffin told The Journal that Griffin, the 50-year-old founder of the hedge fund Citadel, wanted a place to stay in New York as Citadel expands its presence in the city with a new office.

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Griffin's New York City purchase is part of a massive real-estate buying spree over the past few years.

Just this week, Forbes reported that Griffin paid $122 million for one of the most expensive homes ever sold in London, a mansion down the street from Buckingham Palace. 

Earlier this year, Griffin, who's worth an estimated $8.84 billion, according to Bloomberg, broke a real-estate record in Chicago when he bought several floors of a condominium for $58.75 million, according to The Journal. And back in 2015, he bought a penthouse in Miami Beach for $60 million, breaking the record for the most expensive condo sold in Miami. 

Griffin has also reportedly spent nearly $250 million on gathering land on which to build a mansion in Palm Beach, Florida, bringing his real estate spending in the past few years to nearly $750 million.

At Griffin's New York penthouse, his neighbors will include the musician Sting and the hedge-fund manager Daniel Och of Och-Ziff Capital Management, who both recently bought units at 220 Central Park West, according to The Journal.

Corcoran agent Deborah Kern represented the developer of 220 Central Park South in the sale to Griffin. Griffin was represented by Tal and Oren Alexander of Douglas Elliman.

Despite the astronomical purchase price, Griffin's New York City pad is not the most expensive real-estate deal in the world. 

In 2017, Hong Kong billionaire Yeung Kin-man paid $361 million for a property in Hong Kong's wealthiest and most exclusive neighborhood, The Peak, as Business Insider previously reported. A $446 million house for sale in the same neighborhood could break the record for most expensive home sold in the world.

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These are the 10 best paid hedge fund managers for 2018

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  • The 10 best paid fund managers in the world made $7.7 billion in 2018 with one fund manager seeing his fortune increase $1.8 billion last year. 
  • Many of the world's biggest funds saw big returns even after stock markets performed poorly in 2018. 
  • Despite the crazy figures 2018 was a tough year for funds in general with closures outnumbering launches for the third year in a row. 

Beyond the one percenters lies a realm of extreme remuneration reserved for hedge fund managers. The top 10 earners bringing in $7.7 billion in 2018.

Despite a tricky year for both stock markets and fund managers generally, some of the biggest names in the industry racked up major returns for 2018, according to the inaugural Bloomberg Billionaires Index ranking for hedge fund managers.

James Simon of Renaissance Technologies led the way. The former code-breaker's quant fund racking up an insane $1.6 billion in income last year, increasing his net worth to $16.6 billion. 

Unsurprisingly hedge fund titan Ray Dalio made the top 10 for 2018 with an income of $1.26 billion with his flagship Pure Alpha fund gaining 14.6% last year. His own fortune rose alongside Bridgewater Capital's approximate $160 billion of assets. 

Citadel's Ken Griffin was in the news after the hedge-fund manager paid a staggering $240 million for a New York penthouse, just after picking up a London mansion for $122 million. Both these figures pale in comparison to the $870 million he brought in for 2018, taking his own personal fortune to around $10 billion. 

The fourth and fifth highest earners were Two Sigma founders John Overdeck and David Siegel. Their quant fund saw each of them pick up $770 million in renumeration in 2018. 

The year was the third consecutive 12 month period that more funds closed up shop than were started, but the biggest fund managers continued to hoover up opportunities, even as the S&P 500 ended the year down 4.4%. 

Bluecrest's Michael Platt was the sixth highest earner, with $680 million. His fund returned a massive 25%. Meanwhile, David Shaw of D.E Shaw's quant/multi-strategy fund brought in $590 million. 

Element Capital Management's Jeff Talpins became a billionaire for the first time in 2018 after his fund brought in $420 million with a return of 17%.

Chase Coleman of Tiger Global Management has a venture capital arm which helped to boost his fortune to $3.9 billion after earning $370 million last year. 

In 10th position was Izzy Englander of Millennium, whose fund brought him in $340 million for 2018. 

SEE ALSO: These are the 20 wealthiest towns in the US

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A bunch of hedge fund managers featured in 'The Big Short' are among the casualties of Citadel's most recent cuts

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  • Several portfolio managers have been cut by Citadel or resigned from the firm after the $29 billion hedge fund closed its Aptigon stock-picking unit last week.
  • Two of the portfolio managers that were let go were Vincent Daniels and A. Porter Collins, who were featured characters in the Oscar-nominated movie "The Big Short" for their work at the then-Morgan Stanley owned hedge fund FrontPoint Partners. 

Citadel's most recent cuts including two hedge fund managers whose past performance nearly won an Academy Award. 

Vincent Daniel and A. Porter Collins, who were featured as characters in the Michael Lewis-inspired movie "The Big Short," were cut as part of Citadel's closure of its Aptigon stock-picking unit last week, sources tell Business Insider. They were portrayed respectively by actors Jeremy Strong and Hamish Linklater in the 2015 film about the collapse of the US housing bubble.

Daniel and Collins, who were working for the Morgan Stanley-owned hedge fund FrontPoint Partners in the run-up to the financial crisis, joined Citadel in mid-2017 after the pair had founded the hedge fund SeaWolf Capital, which reportedly closed in May 2017. Collins also represented the US in the Olympics as a rower in the 1996 and 2000 summer Olympics. 

See more: Hedge-fund manager Ken Griffin's $238 million NYC apartment shattered the US real estate record — here's a look at his record-setting properties and penthouses

Hamish Linklater, the big shortOther portfolio managers set to leave the firm due to the Aptigon closure include: John Meloy, an energy portfolio manager that joined from Balyasny; Bryn Harder, another energy portfolio manager; Mike Berkley, who was Aptigon's sole consumer portfolio manager; and Michael Janis. Sources say Berkley resigned the day before the Aptigon closure was announced, while Meloy, Harder and Janis were a part of the cuts. 

The portfolio managers mentioned did not respond to requests for comment. Citadel declined to comment. 

The three remaining equity teams at Citadel — Global Equities, Surveyor, and Ashler — have each received at least one former Aptigon team so far, sources said. There were less than a dozen PMs in the unit after Aptigon cut headcount by more than a third roughly a year ago, firing 40 investment professionals, sources said. 

Citadel also lost one of its top stock-pickers from its Surveyor unit this year, Jack Woodruff, who is starting his own fund that Griffin will invest in. The fund was able to retain longtime PM Nilsson Kocher, promoting him after he had accepted an offer from rival Chicago manager Balyasny. 

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Inside the Chicago hedge fund turf war between billionaire Ken Griffin and Dmitry Balyasny

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  • A big-brother-little-brother rivalry between the Chicago-based hedge funds Citadel and Balyasny Asset Management has heated up, sources at both hedge funds said, as the firms fight for talent.
  • Several sources pointed to Citadel's poaching last year of Matt Giannini, Balyasny's former business-development head, as the spark for the turf war.

The headquarters of Ken Griffin's Citadel and Dmitry Balyasny's eponymous hedge fund are separated by one mile, the Chicago River, and plenty of bad blood.

All hedge funds are rivals in some sense, fighting one another for talent, data, and alpha — though Balyasny and Citadel appear to be in different leagues, given their asset base and recent performance. But several sources have told Business Insider that the turf war between the two hedge funds has reached new heights.

The clearest example given by sources inside Citadel was at the end of February during the firm's all-hands annual meeting when Griffin displayed an internal email that Balyasny sent his staff last April with the subject line "Adapt or Die."

"We are getting our butts kicked," the email read, with Balyasny saying his firm's long-short performance "sucks," according to a copy of the email seen by Business Insider. The email also mentioned that investors were wondering whether staff members joined Balyasny "so they can enjoy not working too hard."

A source close to Citadel said Griffin used the Balyasny email as an example of what "poor culture can do to a firm," adding that he also mentioned Enron in the same meeting. But sources inside Citadel said their takeaway from the meeting was not the benefits of a strong workplace culture, but that they needed to beat Balyasny. Sources also said it was not explained how Griffin obtained the internal email.

Balyasny wrote the email because he was "trying to light a fire under the team," one source at Balyasny said, pointing to the fact that the firm restructured, firing one-fifth of employees at the end of last year, as showing how tough it can be when expectations are not met.

Balyasny was up 4.2% through the first quarter of this year, while Citadel was up 6.35% over that period. The S&P 500 was up more than 13% over the same time.

See more:Hedge funds are watching a key lawsuit involving LinkedIn to see if they can spend billions on web-scraped data

"I've known Dmitry for about twenty years and there's no bad blood between our firms," Griffin said in a statement provided to Business Insider. "As a fellow Chicagoan I wish him and his team nothing but success in the years to come."

Representatives for Balyasny declined to comment.

Tensions between the two firms increased when Balyasny, which manages about $7 billion, began aggressively recruiting Citadel portfolio managers and analysts in 2017 and 2018, sources said.

But Citadel's poaching of Matt Giannini, Balyasny's managing director of business development, at the end of last year pushed the competition to a new level, according to several sources at both firms. Citadel created a role for Giannini, who used to work at Citadel before joining Balyasny in 2012, that put him in charge of recruiting traders and other investment professionals in the fund's equities arms.

Balyasny

Griffin's firm also outbid Balyasny this year to retain Nilsson Kocher, a fixed-income portfolio manager, after he signed on to join Citadel's crosstown competitor, and it recently hired away Justin Dodd, who had been a portfolio manager for Balyasny since 2013.

Balyasny, meanwhile, has hired former Citadel staffers, including Alex Lurye, its former chief data officer, and Jeff Runnfeldt, who was once was the head of Ravelin Capital, one of Citadel's now shuttered equity arms.

Both Lurye and Runnfeldt were let go by Citadel, a source close to Griffin said.

There's a difference in the type of talent the two sides have poached from each other, industry sources said, with Balyasny often bringing on Citadel analysts and associate portfolio managers and promoting them, while Citadel has been able to pry away more senior Balyasny employees.

"These firms are at different points of inflection with regard to scale, resources, and ability to compete for talent," said Ilana Weinstein, CEO of the hedge fund recruiter IDW Group. "I would not categorize this as 'rivalry between two Chicago firms.' Citadel's footprint is well beyond that."

Performance-wise, Citadel has had the upper hand on Balyasny recently. Griffin's flagship Wellington fund returned more than 9% last year, while Balyasny finished down 7%.

See more:Here are the hedge-fund managers to watch in 2019 as the industry battles poor performance

Balyasny also closed his long-running "best ideas" fund because of poor performance last year, and several top marketing and investor-relations personnel have left this year, including Stephanie Mesheski, the IR and marketing managing director, and Rich Arbucci, the global head of platforms, sources said.

But a recent investor letter from Balyasny said it had rebuilt its investment teams with 10 new portfolio managers and 39 analysts since the start of the year. That included six new portfolio managers from Citadel, such as Elliott Wilson, who was a portfolio manager in Citadel's global equities division, and Johnny Bubb, Chris Adams, and Peter Gong, who were all analysts while working for Griffin.

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Citadel has poached a top executive from Morgan Stanley in one of Wall Street's fiercest hiring battlegrounds

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Hedge-fund giant Citadel has poached a top executive from Morgan Stanley in one of the fiercest talent battlegrounds on Wall Street. 

Glen Popick, the head of fixed-income strats and a nearly two-decade veteran at Morgan Stanley, has left the investment bank for a role as the head of FICC technology at the more than $30 billion hedge fund, according to people familiar with the matter.

At Morgan Stanley, Popick led a large team of quants that develop algorithms and models to help price derivatives, manage risk, and execute trading strategies. Han Lee, an ex-RBS quant exec who joined the bank in 2015, has been promoted to replace Popick, the people said. 

Popick will report to chief technology officer Umesh Subramanian, who joined Citadel last year from Goldman Sachs, where he was a partner and co-head of technology.

Representatives at Citadel and Morgan Stanley declined to comment. 

Quants and data scientists are among the most coveted personnel on Wall Street, as hedge funds focused on systematic strategies have grown substantially in recent years— even when performance has faltered.

And hedge funds aren't just fighting with rival asset managers, they're at times getting outbid by buzzy Silicon Valley start-ups. 

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Tradeweb just hired a former senior technologist at Citadel for a new role that signals fixed income's increasing focus on trade data

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FILE PHOTO - Lee Olesky, co-founder and CEO of Tradeweb Markets LLC., speaks at the Sandler O'Neill + Partners Global Exchange and Brokerage Conference in New York, U.S., June 6, 2018. REUTERS/Brendan McDermid

  • Tradeweb, which runs electronic markets in bonds, derivatives and ETFs, created a new role focused on building technology to help it better manage its trade data.
  • Caius Howcroft, who most recently served as Citadel's head of platform technology, was named head of data and platform architecture at Tradeweb last week.
  • Howcroft's responsibilities will include helping the markets operator improve its use of cloud computing. 

Electronic marketplace Tradeweb just created a new technology role focusing on improving its data business in yet another sign of the increasing importance of market data in fixed income. 

Tradeweb, which operates trading venues in bonds, derivatives and exchange-traded funds, named Caius Howcroft head of data and platform architecture technologies last week, according to a source familiar with the matter. Howcroft's main responsibilities will be around building technology that will help Tradeweb more efficiently tap into and use the trade data that runs through the various markets it operates, according to the source.

Tradeweb declined to comment. Citadel did not return a request to comment in time for publication. 

Read more:Tradeweb just went public at a $7.5 billion valuation. The company's president told us about the IPO process, electronic markets going mainstream, and what it means to be a public company.

Howcroft comes to Tradeweb from Citadel where he most recently served as head of platform technology, according to his LinkedIn. At the Chicago-based hedge fund, Howcroft worked on application and data platforms for Citadel Asset Manager, according to his profile, covering a variety of business lines. A key part of his role included working with various public cloud providers, which will also be part of his new role at Tradeweb, the source said.

As fixed income markets continue to electronify, venues like Tradeweb have the potential to tap into a deep pool of data that's valuable to both them and their customers. In April, average daily volume across Tradeweb reached $665.6 billion, a 34.2% year-over-year increase.

See more:Wall Street banks have seen electronic trading chip away at their control of the corporate bond market. Now they're fighting back.

While Tradeweb already has tech in place to tap into the trade data on its markets, Howcroft's experience will allow it to further improve its architecture, including its usage of cloud computing, according to the source. Banks have shown an increasing willingness to use the public cloud, and as a result others in the space have followed suit to keep pace.  

In Tradeweb's first quarter report, CEO Lee Olesky spoke to the importance the markets operator put on information. In addition to rates, credit, equities and money markets, Tradeweb views data as a growth area. 

"The global fixed income market is digitizing and, along with it, creating greater demand for electronic trading and market data," Olesky said. 

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Ken Griffin's Citadel is losing a longtime money-manager and the COO of its Global Equities business

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  • Faron Schonfeld, COO of the Citadel's Global Equities arm, and Brian Conn, a longtime portfolio manager, are both leaving Ken Griffin's firm, sources tell Business Insider.
  • Citadel has wooed several money-managers from rival Point72 with large pay packages, according to a media report.
  • Griffin's firm, which manages $32 billion, previously lost the leader of its stock-picking Aptigon business, Eric Felder, when the unit was closed earlier this year. Several portfolio management teams were reassigned to the Global Equities unit after Aptigon's closure. 
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Ken Griffin's Citadel is losing an executive and a longtime portfolio manager from its Global Equities business, sources tell Business Insider.

The departures come soon after a report that Citadel has poached money managers from a major rival — Steve Cohen's Point72. 

Brian Conn, a portfolio manager covering financials for the Global Equities business, had been at Citadel since 2006, according to his LinkedIn, and is leaving the $31 billion hedge fund for personal reasons, a source familiar with the situation said. 

An analyst on his team, Alex Ofsevit, has been promoted to fill his role.  Three other analysts in Global Equities — Cole Patterson, Karl Richter, and Mark Wienkes — were promoted to portfolio managers this year. 

"We are grateful to Brian for his contributions over the past nearly 14 years and wish him well," a Citadel spokesman said.

See more: Inside the Chicago hedge fund turf war between billionaire Ken Griffin and Dmitry Balyasny

Faron Schonfeld, the COO of the Global Equities business, is also planning to leave Citadel, sources said.

Schonfeld, according to his LinkedIn, has been at Citadel for more than four years after more than a decade at Accenture. A source close to the firm said Schonfeld's replacement has not yet been named, and that Schonfeld will stay on for an interim basis until his successor is determined.

Citadel's flagship fund was up 13.5% for the year through the end of June. A source said all five strategies were positive for the year, and that the two resignations were not related to performance. 

Citadel's Global Equities team grew significantly after the firm cut its Aptigon stock-picking unit earlier this year. 

Aptigon, which was run by Eric Felder, was shuttered just two years after launching, and the teams that stayed on at Citadel were spread across Global Equities, Ashler Capital, and Surveyor Capital. 

See more: A bunch of hedge fund managers featured in 'The Big Short' are among the casualties of Citadel's most recent cuts

Citadel has also been aggressively adding tenured money managers. According to the recent Wall Street Journal report, Griffin's firm has poached David Corwin and Justin Lubell — the latter of whom ran a $1 billion book focused on technology — from Point72. 

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What it's like to launch a hedge fund when even the biggest managers are struggling and long-short equity is a 'dirty word'

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  • Launching a hedge fund in 2019 hasn't been easy, and several people who are either raising capital or have recently launched gave us an inside look at the process. 
  • More funds have been liquidated instead of launching, and even the biggest funds are struggling to keep assets right now.
  • "General long-short equity can kind of be almost a dirty word," one person told Business Insider, and new launches are better off with differentiated strategies that can help them stand out from the pack. 
  • For more BI Prime stories, click here.

Several people warned Greg Royce about the "rule of three" when he said he was planning to launch his own fund.

"It would take three times as long, and be three times harder than you originally thought, to raise a third of the capital you want," said the former SAC Capital, Visium, and Citadel portfolio manager.

Royce is planning to launch Maximus Long Short Equity Management in a managed account structure next month. That's a tough undertaking in the best of times, but even more daunting given hedge fund closures have been outpacing openings and startup costs are rising. More people may be looking to  "seeders," which provide a majority of start-up capital in exchange for a chunk of revenue once a fund gets going.  

"It takes certainly a lot of hard work and persistence, and staying in front of people," Royce said.

"I certainly don't have all the answers."

See more: Humans are beating machines, and Pershing Square and Greenlight are crushing it. Here's how hedge funds performed in the first half.

For three straight quarters starting mid-2018, more funds have liquidated than launched, according to the latest data from Hedge Fund Research.

And investors are even leaving the most established funds, according to research from the law firm Seward & Kissel, which found 46% of the largest 200 hedge fund managers' assets experienced "material decline" when comparing their 2018 assets to the prior year's.

Investors lost even more confidence after 2018, when the average fund lost money, and big investors like Stanley Druckenmiller have called for an industry-wide culling of funds

Hopeful hedge fund managers also have a higher bar to clear just to start, thanks to increased costs for technology, data, compliance, and more.

In a blog post on choosing third-party service providers for new hedge funds, Eric Christofferson, a managing director at cloud software provider SS&C, wrote that "the expression 'two guys in a garage with a Bloomberg terminal' can hardly ever apply to any start-ups today."

"Starting a hedge fund these days isn't just about raising capital and running trades," Christofferson wrote. 

That rang true for one person currently in the fundraising process that spoke with Business Insider who asked not to be named because their backer does not want them to speak with the media before launch. They said "you underestimate the amount of time it takes" to complete the "business aspects" of starting a fund, like hiring, filling out proper paperwork, and meeting with potential investors.

This year also hasn't seen the mega-launches of 2018, when Michael Gelband, Daniel Sundheim, and Steve Cohen started multi-billion-dollar funds. The biggest launch so far has been $2 billion Woodline Partners, from former Citadel PMs Mike Rockefeller and Karl Kroeker. Another big one expected this year is a $600 million systematic fund by one of Cohen's former quants, Michael Graves, with its primary backing from Paloma Partners, which also seeded DE Shaw. 

See more: Former Bain & Co. and Sagard Capital partners are launching a small-cap-focused hedge fund

Still, a second person who recently launched a fund told Business Insider there's appetite out there for strategies that stand out from the crowd.

"General long-short equity can kind of be almost a dirty word," said this person, who asked not to be named because their fund still may raise more capital. A recent report from Jefferies prime brokerage division found that only a quarter of new launches focused on equities over the last three years have been generalists, with most focusing on industries like healthcare and energy. 

The toughest period is before you hit $50 million to $100 million, the person said — that's when you feel like you might have made a mistake.

This fear might be contributing to the growth recent launchers have noticed in seeders, like Blackstone, Paloma and Lighthouse, that will give substantial capital to a fund in exchange for a piece of their business and revenue going forward.

See more: Meet the 5 rising stars presenting their investment ideas at the world's highest-profile hedge-fund conference

"It's a different kind of alignment with investors," said Robert Mirsky, head of EisnerAmper's asset management division, about seeding, but overall, he sees it as a positive. 

"I'm willing to give up a lot to get that first big investment through the door." 

That would free up time for the aspiring managers to do the thing they want to do: invest. One person who recently launched said if they could do it differently, they would have less meetings with potential investors because it took away from the time needed to research and continuously update their strategy. 

Because, in the end, it's the track record that matters the most, Royce said.

While fancy lawyers and sparkling new tech are good selling points, "it's almost imperative" to have a good track record, he said.

"It's a data-driven business so to any extent you can report performance numbers, the better," he said. 

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