Ken Griffin’s Citadel hedge fund is stepping on the gas again.
Chicago-based Citadel appears to be the most leveraged of the 25 biggest US hedge funds, with an implied leverage of about 8.8 times investment capital, according to a Post analysis.
Citadel had $142 billion in regulatory assets under management as of March 31, according to an annual filing with the Securities and Exchange Commission. But it only had $16.1 billion in investment capital (commonly called assets under management) on Jan. 1, according to the most recent hedge-fund ranking by Absolute Return, an industry news and data provider.
Griffin, which runs the 21st-largest US hedge fund operation, ranks third in total regulatory assets under management, which includes leverage.
Bridgewater Associates tops Citadel, with $197 billion in RAUM, but has a more modest leverage of 2.3 times capital.
It is followed by Millennium Management, with $157 billion and leverage of 7.6 times capital.
Leverage, or borrowing, ramps returns on the way up but can equally amplify losses on the way down.
Some hedge funds have boosted leverage recently, because debt is cheap and markets have been soaring.
“Leverage is always a worry, and an 8.8 times blunt figure would raise anyone’s eyebrows,” said a longtime investor in Citadel’s funds. But he said he was comforted by Citadel’s “excellent” risk management.
Citadel’s killer leverage last came under scrutiny in 2008, when it had to unwind a leverage of 8.2 times as the financial crisis unfolded. Its hedge funds lost 55 percent that year and took years to recover.