#479
No Need For Clarence Beeks
Published:
Mar 13, 2023
Author:
Cindy Grazer
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2022 was a wildly divergent year for the hedge fund world - while some went out of business alongside the 37% decline in the S&P 500 value, others had a record breaking year. Ken Griffin’s Citadel is perhaps the most notable of outperformers, posting nearly 40% gain that year, likely the largest single-year profit by any hedge fund on record.
Amongst the many asset classes that Citadel invests across, a 20-person group focused on predicting weather trends is perhaps the least conventional. The team is tasked with helping with the commodities business, and positioned the hedge fund very well to profit off of last year’s jump in oil and gas prices. Volatility from COVID-related restrictions lifting and the Ukrainian war also created opportunities for trading in commodities, which was reported to have contributed $7-8b in gains last year.
Now, unlike the Duke brothers in Trading Places (1983 - cracking viewing if you have never seen), Citidel didn't hire the infamous Clarence Beeks to steal the top-secret crop report two days before it was made public and try to corner the FCOJ market. No, the Citadel’s weather team did something totally legal and utilized supercomputers and specialists in various weather patterns, along with hired personnel out of academia in their effort to take more than their fair share.
As alternative data continues to proliferate and become machine readable, hopefully we can expect start-ups, hedge funds and other financial institutions to chase these sources to provide the edge they need rather than resorting to Mr. Beeks and his nefarious ways - EggNog anyone?
Portfolio News
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No Need For Clarence Beeks
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Select Financings
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