Citadel Pulls Off 20% Gain for 2011, Defying Industry

The gods of redemption are smiling on the hedge fundCitadel.

Ever since the investment powerhouse lost more than 50 percent in a devastating 2008, prompting whispers about the end of Citadel and its boy wonder manager, Kenneth C. Griffin, the Chicago-based fund has been on a tear.

And 2011 seems to be the capstone of that recovery from the financial crisis. Its flagship funds gained more than 20 percent through 2011, according to confidential year-end performance figures sent to investors on Thursday, crushing industry competitors who largely lost money last year.

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The returns put Mr. Griffin, who founded Citadel in 1990 at age 22 with $4.6 million, near the top of an elite category of managers this year: those who made money. Other funds that performed well include Brevan Howard, whose bet against Europe proved sensible, and Bridgewater, the world’s largest hedge fund, which makes bets on the macro economy.

By contrast, the average hedge fund lost nearly 5 percent in 2011, according to Hedge Fund Research, which tracks industry data.