The Irony Of Taking A Hedge Fund Public

Posted in Business on Aug 14, 2015

Kenneth Griffin is one of the top money managers in the country. He started out timing the market and making the right moves during a late 1980’s stock market crash- which led to opportunities to invest other people’s money in ever larger amounts.

He has not disappointed and his Citadel fund is one of the few funds to survive the economic downturn several years ago relatively intact.

Like other major fund managers in investment banking, Mr. Griffin has an interest in taking his fund public to afford it access to even more capital than it already has. Of course with the fund currently representing over 25 billion dollars in assets, it is the case that he has achieved a lot of what the market requires companies to have in terms of size in order to have a successful IPO.

The irony for many investors, however, is that when a hedge fund is public, it can become a hedge for other investors, making it possible to see greater swings in value. One good example that shows where there can be potential short-term questions is with the Mexican Peso, which is a hedge currency for many traders. They may buy the currency to hedge against another investment that they are making, not really expecting their investment to increase a lot in value. When hedge funds do that with a company, it means you may not always have the fund be at its true valuation in the marketplace due to the size of the investments that are being made.

Fortunately, of all people, Mr. Griffin is at the helm and has been beating the market for a few decades. There are very few scenarios that he has not experienced during that time period. He can be expected to focus on building value for all shareholders when there is a choice. In fact, most analysts think that it is a solid idea for Citadel Capital to look at taking the next step towards an IPO. They have clearly weathered the storm and rebuilt the fund’s value to a level where outside investors would be attracted on a permanent basis. Their experience working with providing liquidity for others should speak volumes to investors about the firm’s ability to keep the shares of its own investors behaving well.

Like other fund managers, Ken Griffin has been through a lot over the past few years- performing well the entire time. If he does choose to go the IPO route with Citadel Capital, he has a chance to continue to share his financial innovation and acumen with an ever-growing audience.

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