Citadel is launching a new stock-picking unit based in London that will support the hedge-fund firm’s expansion in Europe. The unit will be led by Nabeel Bhanji, a high-profile hire from Elliott Investment Management.
The new unit, Strategic Equity Investments, will empower portfolio managers to take bigger positions in European companies and hold on to them for longer than Citadel has historically.
Bhanji will also join Citadel’s leadership ranks and oversee the international investment teams that bet on the outcomes of mergers and other corporate events. His first day is Monday.
Although Bhanji is a veteran of activist investing, having spent more than a decade in Elliott’s London office, that won’t be part of his new job at Citadel.
“Activism is often about, ‘Is there a problem here? How can we fix it?’” Bhanji said in an interview. At Citadel, the approach will be, “Let’s look at companies we already like and size up the ones we like the best.”
Strategic Equity Investments will sit alongside Citadel’s other stock-picking units. Three of those are based in the U.S., while a fourth, Citadel International Equities, operates in Europe and Asia.
Multimanager hedge funds such as Citadel have amassed a glut of capital thanks to years of steady performance and popularity. Assets at multimanager funds increased by about $60 billion in the 12 months ending in June, growing at a rate about four times faster than the rest of the industry, according to estimates from Goldman Sachs.
Finding enough people and places to invest it all is perhaps these firms’ biggest challenge. That need has fueled bidding wars for proven portfolio managers and poachings such as Bhanji’s. Firms such as Millennium Management have allocated some of their money to outside hedge-fund managers. Citadel regularly handed back profits to clients in the past, in part because of limited opportunities to invest them all.
“We have the ability to raise and generate more capital better than we have the wherewithal to immediately find places to deploy that’s consistent to the ways we manage risk,” Pablo Salame, Citadel’s co-chief investment officer, said in an interview.
The firm also hopes Bhanji will provide an edge in recruiting other portfolio managers. He played a leading role in some of Elliott’s most prominent international campaigns, including those involving Japanese industrial conglomerate Toshiba, global tech investor SoftBank and mining giant Anglo American.
