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- Citadel made $7 billion-$8 billion on commodities trades last year, according to the Financial Times.
- The profits were aided by a team of scientists the fund hired a few years back that have helped spot opportunities.
- Traders were rewarded handsomely for their performance, with top staff earning millions in bonuses.
Citadel made as much as $8 billion on its commodities trades last year, thanks to a team of scientists and analysts that helped drive the hedge fund titan to record gains in 2022.
The Financial Times reported that the hedge fund recruited a group of 20 scientists and analysts in 2018 to help it execute trades in commodities sectors, leading the firm to gain 38% in 2022 while the broader market floundered.
Sources familiar told Financial Times that the gains enjoyed by the secretive hedge fund are largely due to the firm dialing up its exposure to gas and other commodities, which saw an explosion in prices last year amid easing pandemic restrictions and Russia's invasion of Ukraine.
Scientists and analysts helped trace gas supplies across the US, and used supercomputers to forecast the weather up to two months in advance, the report said. That allowed traders to accurately predict gas demand – particularly in Europe, which saw gas prices skyrocket as Russia throttled pipeline flows to the continent.
Traders at the firm were also encouraged to keep potentially risky positions, and Citadel chief Ken Griffin was known to allow traders to take on more risk when he saw a good trading opportunity, the report said.
Overall, sources say Citadel pulled in $7 billion-8$ billion in commodity trades over 2022, about half of the firm's overall profits. The hedge fund raked in a record $16 billion last year, surging past Ray Dalio's Bridgewater, which held the title as the most successful hedge fund for seven running years, according to LCH Investments.
With massive profits come massive bonuses for the firm's traders. Insiders said Citadel doled out tens of millions of dollars, and top traders at the firm could get up to $100 million this year, the report said.