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Citadel Head Bond Trader (And TBAC Member) "Leaves" After Losing $1 Billion

Tyler Durden's picture




 

It is almost too coincidental to be a coincidence: on the day Ben Bernanke, who until a year ago was the biggest fixed income portfolio manager in the world courtesy of the Fed's $4.5 trillion in assets, joins Citadel as an advisor, the massively levered "market-neutral" hedge fund which as we showed earlier has $176 billion in regulatory assets, "loses" its global head of fixed income, senior managing director Derek Kaufman. Well not exactly loses. The reason for his "voluntary" departure: according to Bloomberg Kaufman is leaving Citadel not because he is about to be replaced by the former Fed chairman but because last year he lost $1 billion "in a variety of trades."

Some more details on Derek from his Linkedin Profile:

Derek Kaufman is [ZH: was] Head of Global Fixed Income and a member of Citadel’s Portfolio Committee.

 

Prior to joining Citadel in 2008, Mr. Kaufman was a Managing Director at JPMorgan Chase, where he most recently served as Global Head of Fixed Income in the Proprietary Positioning Business. He started at J.P. Morgan in 1996.

 

Mr. Kaufman is a member of the Treasury Borrowing Advisory Committee and the Federal Reserve Bank of New York’s Investor Advisory Committee on Financial Markets. He is a member of the Economic Club of New York, on the Board of Trustees for Third Way, an innovative think-tank in Washington, D.C., and on the Leadership Council of Robin Hood.

 

Mr. Kaufman received a bachelor’s degree in Applied Math/Economics from Harvard College.

Bloomberg is sparse on the details but notes that Katie Spring, a spokeswoman for the Chicago-based firm founded by Ken Griffin, said Kaufman resigned two weeks ago and his portion of the portfolio has been liquidated, adding that the rest of his team is remaining. Calls to Kaufman weren’t answered. It is worth noting that Kaufman was happy to note that he won the 2013 award for Global Macro Fund of the Year from HedgeFund intelligence.

Citadel’s fixed-income operations are divided into 18 different portfolios that focus on specific regions of the world or various parts of the credit markets. Fourteen of these were profitable last year, but the $4 billion Global Fixed Income Fund ended the year up just 0.75 percent, said the person, who asked not to be named because the firm is private."

 

Citadel, which manages about $26 billion in assets, hired Kaufman from JPMorgan Chase & Co. in 2008, where he was a proprietary trader, to expand the fixed-income operation beyond its Kensington and Wellington funds, two of the biggest pools the hedge fund operates. Kaufman also managed money for Kensington and Wellington, said the person.

What is particularly curious is that Kaufman is, as he notes on his profile, a member of the Treasury Borrowing Advisory Committee, or TBAC: the same committee which back in 2013 first rang the alarm bell over pervasive collateral and Treasury shorages.

One wonders if Kaufman's entire strategy was to be a part of the bandwagon that made up the second most crowded trade at the beginning of the year, i.e., shorting the 10 Year Treasury (the other most crowded trade of course being long the USD ahead of the Fed's "imminent" rate hike).

If so, it would explain some of the recent strength in the bond market, where billions in shorts had to be unwound, i.e., bought in the market. Also, one wonders how many other portfolio managers at other "market neutral" funds will follow in Kaufman's footsteps.

Ironically, with Bill Dudley recently admitting - according to Bank of America - not only that he would like stocks to keep rising, and US Treasurys to sell off (gradually) it would be simply poetic after Ben Bernanke is hired by Citadel, that Citadel's former head bond trader should be hired by that other massive hedge fund, the New York Fed for his Treasury shorting skills. It won't be difficult either: Kaufman already is a member of the Federal Reserve Bank of New York’s Investor Advisory Committee on Financial Markets.

Because with traders (and advisors) like really needs to be worried about how the Fed will sell its $4.5 trillion in assets when the day finally comes?

 

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Thu, 04/16/2015 - 12:50 | 5999202 Looney
Looney's picture

He looks like Bernanke’s Mini-Me. Is he two feet tall? ;-)

Looney

Thu, 04/16/2015 - 12:50 | 5999217 Xibalba
Xibalba's picture

Kaufman-German name.  Shalom Bernanke- is NOT a German name.  

Thu, 04/16/2015 - 12:52 | 5999228 clooney_art
clooney_art's picture

This guy looks like Bernanke in the past. May be they go in, lose billions and get thrown out younger.

 

 

Thu, 04/16/2015 - 12:57 | 5999248 power steering
power steering's picture

He lost a billion dollars. I hate when that happens.

Thu, 04/16/2015 - 13:15 | 5999330 nope-1004
nope-1004's picture

When I was a kid, a billion dollars was a lot of money. Today?  Meh.....

 

Proof fiat is worthless.  Debauched and used wrecklessly.

 

Thu, 04/16/2015 - 14:21 | 5999635 Bad Attitude
Bad Attitude's picture

When is his "suicide" scheduled? He better stay away from tall buildings and nail guns.

Forward (over the cliff)!

Thu, 04/16/2015 - 13:01 | 5999266 KnuckleDragger-X
KnuckleDragger-X's picture

He looks like a frigging bobblehead, but the again, so does helicopter Ben.....

Thu, 04/16/2015 - 13:33 | 5999430 NoVa
NoVa's picture

and on the Leadership Council of Robin Hood

Kinda (actually REALLY) funny - he was on the board of an organization to prevent poverty!  

https://www.robinhood.org/leadership-council

 

He did a good job of impoverishing some Citadel folks' money - -

NoVa

Thu, 04/16/2015 - 14:44 | 5999752 gruden
gruden's picture

What he needs to do is be very, very careful around staple guns.  Those things tend to fire errantly into the chests of bankers & hedge fund guys who have lost big $$$...

Thu, 04/16/2015 - 13:12 | 5999304 DipshitMiddleCl...
DipshitMiddleClassWhiteKid's picture

This guy is a jew too

Thu, 04/16/2015 - 13:16 | 5999334 Hippocratic Oaf
Hippocratic Oaf's picture

The tribe won't let him experience any heartache. They take care of their own.

Once a piece of shit jew, .............

Thu, 04/16/2015 - 13:12 | 5999306 junction
junction's picture

If Citadel lost one billion dollars on shorting Treasury bonds, that means the counterparties at the other end all together made one billion dollars.  Hopefully, Nazi George Soros wasn't one of the wolves who feasted on Kaufman's idiotic gamble.

Thu, 04/16/2015 - 13:13 | 5999312 ZH Snob
ZH Snob's picture

maybe ben can lose the rest of their capital, get a golden parachute and another sucker to employ him.

Thu, 04/16/2015 - 14:37 | 5999724 Ruffmuff
Ruffmuff's picture

I'm surprised he is still breathing.  Best trader ever.

Thu, 04/16/2015 - 17:37 | 6000429 golden torch
golden torch's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com

Thu, 04/16/2015 - 12:47 | 5999208 tarsubil
tarsubil's picture

Losing that first billion is always the hardest and most fulfilling.

Thu, 04/16/2015 - 12:50 | 5999221 unplugged
unplugged's picture

you mean, like, that its lost to your wife's shoe collection ?

Thu, 04/16/2015 - 12:59 | 5999257 maskone909
maskone909's picture

your thinking of paul mcartney

Thu, 04/16/2015 - 12:49 | 5999211 unplugged
unplugged's picture

that forehead of his presents a large target for flying nails

Thu, 04/16/2015 - 12:58 | 5999213 WeTheSheeplez
WeTheSheeplez's picture

He must be Cramers biggest fan... actually his only fan...

 

Wait...if debt is money... didn't he make them a billion...

Thu, 04/16/2015 - 13:02 | 5999268 KnuckleDragger-X
KnuckleDragger-X's picture

For somebody.....

Thu, 04/16/2015 - 12:50 | 5999218 heisenberg991
heisenberg991's picture

This guy is working at McD's. Lost a billion bucks lol

Thu, 04/16/2015 - 12:53 | 5999229 TrumpXVI
TrumpXVI's picture

Wait a minute.

How is it even possible for these assholes to lose that kind of money????

Thu, 04/16/2015 - 12:54 | 5999237 Shizzmoney
Shizzmoney's picture

Can we just call these guys, "gamblers" instead of "hedge fund managers"?  That's essentially what they are.

 

Thu, 04/16/2015 - 12:55 | 5999239 FrankieGoesToHo...
FrankieGoesToHollywood's picture

Well, in his defense, Kaufman didnt have a printing press.

Thu, 04/16/2015 - 12:55 | 5999242 Mr. Bones
Mr. Bones's picture

I wonder if he's going to be the victim of an unfortunate home improvement catastrophe or an inexplicable boating accident.

Thu, 04/16/2015 - 12:57 | 5999246 buzzsaw99
buzzsaw99's picture

bill dudley can "like" in one hand and shit in the other and see which fills up faster.

Thu, 04/16/2015 - 13:00 | 5999259 Agstacker
Agstacker's picture

Bad day at the casino.

Thu, 04/16/2015 - 13:01 | 5999264 Mister Delicious
Mister Delicious's picture

Something tells me he'll still end up with a 7 figure job.

And still end up being double stuffed with circimcised cock at those Eyes Wide Shut parties in Westchester...

Thu, 04/16/2015 - 13:03 | 5999270 tony wilson and...
tony wilson and saturn zion devils's picture

derek dell  boy kaufman A

not as funny as chemotherapy andy

but just as jewish.

 

i have contacted the simon weasel spielberg centre for hate crimes in the media  and we  will be calling this out as anti semeticks needing money  compensations and a donation in gold bars  to the adl

already

Thu, 04/16/2015 - 13:04 | 5999274 Blankenstein
Blankenstein's picture

He was at the Morgue before Citadel.

 

"Citadel is expanding the fixed-income operation it started after hiring former JPMorgan Chase & Co. proprietary trader Derek Kaufman in 2008 to widen its range of funds beyond Kensington and Wellington, "

 

http://www.bloomberg.com/news/articles/2014-02-10/two-goldman-sachs-trad...

Thu, 04/16/2015 - 13:13 | 5999286 undercover brother
undercover brother's picture

He needs to talk to H&R Block and get that billion back.

Thu, 04/16/2015 - 13:08 | 5999288 SmilinJoeFizzion
SmilinJoeFizzion's picture

Keep this guy out of the nail gun section at Lowe's and Home Depot

Thu, 04/16/2015 - 13:13 | 5999309 jal
jal's picture

He might have lost $1B of other peoples money last year but I'm sure that he has made money for someone else.

Did you say that he is not living under the overpass?

 

Thu, 04/16/2015 - 13:23 | 5999370 Never One Roach
Never One Roach's picture

Well, he can join Team Clinton and work for the Everyday Peeples.

Thu, 04/16/2015 - 13:26 | 5999389 nakki
nakki's picture

I'm sure he'll land on his feet. I've known many a trader to blowout and a few weeks later they were back trading with someone else's money.

What's a billion dollars today? I'm starting to feel like Dr. Evil only wanting $2-3 million to get by for the rest of my life. In another 20 to 30 years 2 million will be like $200,000 today and that ain't shit. 

Thu, 04/16/2015 - 13:29 | 5999401 JohnGaltsChild
JohnGaltsChild's picture

Really....a measly billion?

Come on, that can't be the reason.

Thu, 04/16/2015 - 17:20 | 6000369 Angelo Misterioso
Angelo Misterioso's picture

a new guy is showing up and they need to clean up all the mismarked positions - overmarked by a billion - so how much was he paid to be the fall guy?

Thu, 04/16/2015 - 13:33 | 5999428 WTFUD
WTFUD's picture

What's 9 Zeros in the Grand Scheme of Things?

How come you never hear from the folks who's money, gold and wealth has been disappeared?

Will Batman foil the Joker?

Does the Pope shit on little boys in the woods?

Thu, 04/16/2015 - 13:36 | 5999447 astoriajoe
astoriajoe's picture

Did they say how much he made in a variety of other trades?

Thu, 04/16/2015 - 13:43 | 5999477 williambanzai7
williambanzai7's picture

He looks like a father raper.

Thu, 04/16/2015 - 13:45 | 5999493 Conax
Conax's picture

They wasted a lot of money on this guy. I would've taken that job for $40K and lost that billion twice as fast as he did.

i'm pretty good!

Thu, 04/16/2015 - 13:46 | 5999498 cheech_wizard
cheech_wizard's picture

What! He didn't follow the rules? BTFATH!

Stupidity personified...

Thu, 04/16/2015 - 13:49 | 5999517 vegas
vegas's picture

Nothing like an opinion to get your ass in trouble with "other people's money" [OPM]; nice going there Derek, I like that nice round number of 1 large for a stop loss.

 

www.traderzoo.mobi

Thu, 04/16/2015 - 14:13 | 5999608 Iceobar
Iceobar's picture

'Looks' like a number 1 draft pick for the Fed......

Thu, 04/16/2015 - 14:16 | 5999615 Bryan
Bryan's picture

Yes, we can't have any losses on the books.   100% winners is all that's accepted!

Thu, 04/16/2015 - 14:29 | 5999673 rlouis
rlouis's picture

I'm going out on a limb here, but I predict that in a few years time following Bennie's advice will have cost more than a billion.

Thu, 04/16/2015 - 14:31 | 5999682 Downtoolong
Downtoolong's picture

Citadel will make it up on Fed sponsored HFT volume (sorry, HFT liquidity).

Thu, 04/16/2015 - 14:36 | 5999710 Downtoolong
Downtoolong's picture

The really sad fact is that Kaufman will get hired again somewhere. Wall Street and the financial industry are rife with traders like him who have lost tons of money, only to be fired and rehired by a competing firm. Failing is bad, unless you do it large enough, then it becomes like a badge of honor or something.

Thu, 04/16/2015 - 14:35 | 5999714 Dickweed Wang
Dickweed Wang's picture

Derek Kaufman is [ZH: was] [a] Head . . . .

Yes he is!  A DICKHEAD!!!

Thu, 04/16/2015 - 15:03 | 5999849 venturen
venturen's picture

When are they going to get the guys from TV texas holdem poker on the NY FED? It is astounding the FED is just made up of gamblers(known as Prop traders). Where can you bet on the end of the financial system...it is so full retard...I give it two years...and a bit of bloodshed....as the bailouting of criminals need to stop!

Thu, 04/16/2015 - 16:11 | 6000101 Seal
Seal's picture

Sounds like he got gobsmacked by FedSpeak

Thu, 04/16/2015 - 17:44 | 6000213 juicy_bananas
juicy_bananas's picture

He'll get a nice consulting gig.  https://www.youtube.com/watch?v=4cyvmF7GD8o

Thu, 04/16/2015 - 20:27 | 6001102 SmedleyButlersGhost
SmedleyButlersGhost's picture

Hey Citadel -'if you're hiring - I'll take $100k and not trade a thing puts you up -uh uh uh - fuk you do the math

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