TheChek News Flow

Late Wednesday, the chip maker delivered another impressive, eye-watering report, with unprecedented growth rates for a company its size. Revenue for the July second fiscal quarter was up 56% year over year to $46.7 billion, ahead of expectations. Nvidia’s outlook was solid. For the current quarter ending in October, the company provided a revenue forecast range with a midpoint of $54 billion, which was above analysts’ consensus of $53.4 billion.

But Nvidia shares initially fell modestly after the results, which likely has more to do with some profit-taking after the stock rose about 35% over the prior three months. Uncertainty over its business in China may have been another factor.

To be sure, China remains Nvidia’s biggest problem. While some analysts had hoped for a quick rebound in sales of Nvidia’s China-specific H20 graphics processing unit, or GPU, it hasn’t happened. In fact, on Wednesday, Nvidia said there were no H20 sales from China-based customers in the second quarter at all. The company also hasn’t assumed any H20 shipments to China in its guidance for the current quarter.

“We continue to work through geopolitical issues,” Nvidia CFO Colette Kress said on the earnings call.

It’s worth noting that the company’s fiscal third-quarter outlook still beat Wall Street’s current estimates, even without the benefit of H20 sales.

Nvidia’s Chinese sales have become a casualty of the continuing back and forth between the U.S. and China. In April, the U.S. government moved to effectively ban sales of Nvidia’s H20 chips to China by tightening export licensing requirements. In July, the U.S. reversed course and said it would approve those H20 licenses. But China reportedly grew frustrated after disparaging remarks from U.S. Commerce Secretary Howard Lutnick and told companies not to order H20s due to security concerns.

Last week, Nvidia CEO Jensen Huang said he was surprised by the latest development given that China’s government had asked Nvidia to secure H20 export licenses from the U.S. government. “Hopefully, the response that we’ve given to the Chinese government will be sufficient. We are in discussions with them,” he said. Huang has denied the existence of any kind of security backdoor built into Nvidia’s H20 chips.

Despite all the noise, there’s a good chance things will get resolved given China had originally asked Nvidia for H20 licenses and with the high demand for Nvidia GPUs in the Asian country. The latest developments are likely more theatrics than a substantive change in views.

The H20 was designed to comply with restrictions that prohibit China’s access to the most advanced AI hardware. Despite those limitations, Chinese companies still prefer the H20 to run AI inference workloads reliably, as Nvidia’s software is more stable than anything created in China.

If the two economic superpowers come to terms, the benefit to Nvidia would be significant. Back in May, Nvidia said it could have sold $8 billion of H20 chips in the second quarter, absent regulatory hurdles.

Huang also said sales of a newer Blackwell chip for China is a “real possibility” in the future, but that it was too soon to know whether that would be approved.

This area of the company’s business is unpredictable and could change at any moment. The bottom line is that the China revenue for Nvidia is all upside from here.

Ultimately, Nvidia investors should focus on the company’s main AI chips, which will drive positive results no matter what happens with China. The company is still poised to benefit from its most important product releases in its history: the 72 GPU rack servers, called the GB200 NVL72 and the GB300 NVL72.

The NVL72 systems incorporate 72 GPUs, linked together inside one server rack, up from eight GPUs in the previous version. It’s an unprecedented density of computing power that is crucial to train the latest AI models.

Huang has confirmed that the new racks are in full production and that output is ramping up after initial manufacturing obstacles. Each rack costs several million dollars.

“It delivers an exceptional generational leap,” Huang said on the earnings call. Nvidia’s NVL72 “rack-scale computing is revolutionary, arriving just in time as reasoning AI models drive order of magnitude increases in training and inference performance requirements.”

There is evidence the rack server ramp is under way. Nvidia’s networking revenue segment surged 46% quarter on quarter in the July quarter. That’s a good sign, as NVL72 systems require more networking hardware per rack.

Over the course of the latest earnings season, we’ve learned that Big Tech firms continue to increase their capital expenditure budgets while emphasizing that demand for AI is outstripping capacity. Nvidia’s NVL72 rack servers are the product needed by start-ups and enterprises as they clamor for more AI computing resources.

With the production of Nvidia’s AI rack servers just ramping up, several quarters of strong financial performance should be on the way. While Nvidia stock has doubled from April’s lows, it isn’t overpriced. Shares trade at 32 times forward earnings—almost cheap, given the 50% earnings growth forecast by Wall Street analysts for the current fiscal year.

In this column, I have repeatedly said that Nvidia shareholders are best served by taking a long-term view on the stock and not selling in response to volatility unless there is a significant change in Nvidia’s long-term outlook. That advice has paid off, with Nvidia touting a world-topping $4.4 trillion market value.

Nvidia’s underlying fundamentals remain as strong as ever. Hold on.

There’s little that’s more frightening to an income investor than a company deciding to spend billions of dollars on a deal—dollars that could be going to the dividend. But in the case of AT&T, which just spent $23 billion to acquire spectrum from EchoStar, the acquisition could make the dividend safer.

Spectrum—the radio frequencies your wireless calls travel over—is the finite resource that every mobile company needs. Just as you can’t have two radio stations in the same city broadcasting on the same frequency, companies like AT&T, Verizon Communications, and T-Mobile US need spectrum for their customers’ calls and data. It’s all managed by the U.S. government via auctions and licenses.

Tuesday’s announcement was a big deal. AT&T said it had an agreement to purchase about 50 MHz of low and mid-band spectrum from EchoStar, adding to the company’s “solid” portfolio. Wireless carriers control hundreds of MHz of spectrum, and AT&T listed $127 billion worth of license assets in its 2024 annual report. The telecom giant touted the deal as covering “virtually every market across the U.S. and positioning AT&T to maintain long-term leadership in advanced connectivity across 5G and fiber” in a press release announcing the deal.

The deal was enormous for EchoStar, which was at risk of losing the spectrum it wasn’t using, and the satellite and wireless communications company saw its stock jump 70% on the deal. Some EchoStar bonds jumped 25%—they had been yielding north of 50% before the agreement and now yield about 14%, with the cash helping to pay off some of its $26 billion in debt.

The acquisition should also be good news for the three top telecoms, notes Citi analyst Michael Rollins. By buying the spectrum, AT&T keeps it out of the hands of a potential new, fourth competitor. “We view this as a positive for the longer-term trading multiples for AT&T, Verizon, and T-Mobile,” he says.

The large outlay doesn’t appear to affect AT&T’s financials in a way that threatens the dividend. The added debt looks manageable, and after the company announced the deal, it maintained its financial guidance—it still expects to earn $2.02 a share in 2025—and its share repurchase plan, which involves buying $20 billion in stock from 2025 through 2027. Business was strong to begin with—the company added 401,000 wireless subscribers and 243,000 fiber internet subscribers in the second quarter—and dividend coverage looks solid, with AT&T returning roughly half of its annual free cash flow to investors.

Citi’s Rollins already had a 90-day short-term catalyst call on the stock, which he rates Buy. He likes the purchase, too. AT&T will use the excess spectrum to beef up its wireless services to the home. “A very logical path for AT&T,” adds Rollins, who notes that the company wants to bundle home and wireless services to boost growth.

He has a $32 price target for AT&T stock, up 10% from Wednesday’s close of $29.06. Combining that with AT&T’s 3.9% dividend yield would result in a 14% total return over the next 12 months.

Rollins is also a fan of Verizon, which he also rates Buy. A combination of low valuation and sustainable growth underpin his views. He also likes Verizon’s pending acquisition of Frontier Communications, which will beef up the company’s fiber internet offerings. Verizon trades for about nine times estimated 2026 earnings, while AT&T shares fetch 13 times.

While his $48 target for the stock suggests a gain of just 8.4 %, adding Verizon’s 6.2% dividend yield implies a total return of almost 15%, similar to AT&T. Verizon is the eighth highest-yielding stock in the S&P 500. AT&T is the 60th, with its yield sliding from 5.6% a year ago due to the stock’s outsize strength.

It was only a little more than two years ago, in the summer of 2023 that AT&T was trading below $15 a share on concerns that copper wires sheathed in lead might need replacing to mitigate health concerns. Since then, AT&T has returned about 120%, with a fifth of that return coming from dividends. Verizon stock has returned about 50%, just ahead of the S&P 500 over the same span, with 40% of the total return coming from dividends.

The AT&T spectrum buy should just be another catalyst to boost the share performance of both stocks in the coming year. Income investors should enjoy their dividends—and their capital gains, too.

Palantir Technologies CEO Alex Karp unloaded more than 400,000 shares in the data-analytics company last week, according to a filing with the Securities and Exchange Commission.

A Form 4 filed with the agency on Friday showed that Karp sold 409,072 shares of common stock, at prices ranging from $142.46 to $157.56 a share, on Wednesday and Thursday. The sales were executed through automatic transactions to cover tax-withholding obligations following the vesting of restricted stock.

Following the transactions, Karp owned about 6.43 million shares of Palantir, which were valued at more than $1 billion as of Monday afternoon.

For most of the year, Palantir stock had seemed untouchable, continuing to rise regardless of concerns about its lofty valuation and high volatility. Shares have more than doubled this year, but fell 1% to $157.17 on Monday. The iShares Expanded Tech-Software Sector exchange-traded fund, which counts Palantir among its major holdings, was off 0.7%.

Palantir’s rise has been challenged as of late. Shares of the artificial-intelligence heavyweight fell for six consecutive trading sessions through Wednesday, marking their longest losing streak since April 2024. The decline came after strong second-quarter results caused the stock to surge earlier this month.

Other big names in tech, notably AI plays such as Nvidia, have come under pressure as investors question how long the current red-hot enthusiasm will last. OpenAI CEO Sam Altman’s remarks that investors were “overexcited” about the technology, and an MIT report casting doubt on the revenue-generating potential of generative AI, appeared to be compounding the downturn.

Given all that, scrutiny is mounting ahead of Nvidia earnings later this week. The chip maker is seen as a bellwether for the broader AI and semiconductor industries. Commentary from CEO Jensen Huang is expected to shed light on the state of AI demand.

Hedge Funds’ New Secret Weapon

New companies are collecting any kind of business and consumer economic activity they can get their hands on and selling it to investors.

If you took a road trip in the past year, chances are good that you drove by one of Ryan Joyce’s cameras. They’re everywhere: hanging from highway streetlights, protruding from the walls of warehouses, and sitting on the roofs of car dealerships.

Joyce is the CEO of Genlogs, a start-up that collects data on the movements of America’s semi-trailer trucks. The company operates nearly a thousand cameras that monitor the nation’s roads, snapping photos of 18-wheelers as they drive past. Joyce says Genlogs can tell its clients where every delivery truck in the country is located on a given day.

Most of Genlogs’ customers are logistics and freight brokerage companies, which use the start-up’s data to reduce theft and optimize delivery routes. But recently, Joyce says he has been receiving lots of interest from a new set of potential clients: investors. Hedge funds want Genlogs’ data because it can tell them the volume of truck traffic in the U.S., a useful clue to the health of the American economy. Genlog cameras could even help investors bet on specific publicly traded stocks, like Walmart or trucking giant J.B. Hunt Transport Services, Joyce says.

Welcome to the world of “alternative data.” It’s a fast-growing market where companies collect information on everything from credit-card transactions to the number of travelers passing through security at airports. Investors then buy the data, hoping to glean insights beyond those provided by traditional company filings and government reports.

The use of alternative data by investors is nothing new. For decades, various funds have incorporated unusual data sources—including measures of electricity consumption and counts of the number of cars parked outside retail stores—into their research processes.

What has changed since the pandemic, insiders say, is the volume, sophistication, and variety of the data being collected and used. Thanks to recent advances in computer vision technology, language processing models, and web scraping tools, even small firms like Genlogs can harvest far larger and more complex data sets than ever before.

It isn’t just trucks. Data vendors now tell investors how many customers are clicking on a particular product on an e-commerce website. They track how many pedestrians are entering a specific bricks-and-mortar store. They monitor blockchain activity, Reddit and X feeds, and satellite imagery.

Not surprisingly, as the quality of alternative data has improved, a rapidly growing share of the investment community has come to embrace it. “The hedge fund part of our business is growing 100% year over year,” says Craig Fuller, CEO of FreightWaves, a company that tracks 85% of global cargo volume as it moves around the world.

Investment firms will spend at least $3.3 billion on alternative data sets in 2025, according to Neudata, a consultancy. Spending has grown by 21% a year since 2020, and could climb to more than $8.6 billion by 2030 (estimates go as high as $39.9 billion). A poll released in February by law firm Lowenstein Sandler found that two-thirds of institutional investors now use alt data, double the share compared with just two years ago.

Richard Lai, Bloomberg’s global head of alt data, says investors’ appetite for data has dramatically exceeded expectations: The number of firms using Bloomberg’s alt data analytics platform is more than four times the company’s estimate of the market size in 2023, he says.

Prices for alt data vary widely. More than a quarter of data sets tracked by Neudata have a sticker price of $25,000 or less, while only 3% of data sets sell for $500,000 or more. But being on that upper end pays huge dividends. The industry’s biggest players can rake in tens of millions of dollars in annual sales from a single data set, according to Neudata.

Stock market investors aren’t the only ones gobbling up data: private-equity firms use alt data to assess potential acquisitions; insurance companies use it to set premiums; big-box retailers use it to pick new store locations. But sales to investors are a growing share of the pie, according to Daryl Smith, Neudata’s head of research.

An Arms Race

Fund managers are tight-lipped when discussing how alt data informs their investment strategies. But one thing isn’t a secret: Data sources once considered unconventional are now part of the day-to-day investment process at most big asset managers. And securing new data sets, sometimes at significant cost, is one of the key ways that elite funds stay ahead of the pack.

“There has been a technology arms race within the quant world to find and engage with data,” says David Easthope, a senior analyst at Crisil, a research firm focusing on the financial industry. “Investors who are seeking superior returns are always looking for an edge.”

To make their trades, hedge funds’ quant models rely on clean, high-frequency data sets that go back for years or even decades. Until recently, the number of data sets that met quant funds’ strict criteria was relatively limited. But as data sets mature, quant investors say the number of data sets digestible by their models is growing.

Artificial intelligence is opening up new frontiers, as well. It’s allowing companies to analyze new types of data, like Genlogs’ camera footage or pdf files of government documents. It’s also helping vendors improve the quality of their existing databases.

“The growth opportunity isn’t just in the data itself,” says Carolyn James, director of strategic sales at ImportGenius. “It is the ability, with AI models that really do deep learning, to actually link data to other sources.” Thanks to AI, ImportGenius says it can provide its clients with container-level specificity of every product entering and exiting the U.S. by boat.

“AI is definitely a tailwind,” says Topher Haddad, CEO of start-up Albedo Space. Albedo plans to launch satellites into very low earth orbit, where they will capture images of the earth’s surface at a resolution previously reserved for military spy satellites and drones. As computer vision improves, he says, “You can actually pull out and extract more intelligence, in an accurate way, from any given image resolution.”

AI is also making it easier for non-quantitative investors to use alternative data sources. Analysts can use AI models to analyze the text of social-media posts or the audio of investor calls, without spending millions on developing in-house models. They can also buy data directly from a growing number of AI-powered data vendors, or use information published on Bloomberg’s alt data analytics platform.

Thanks to improved accessibility, many data businesses say they’re now seeing strong interest from the “long tail” of investors: the small hedge funds, family offices, wealth advisors, and retail traders who previously lacked the resources to make use of large volumes of alternative data.

Company filings and government economic reports simply aren’t good enough to stay ahead anymore, says Jay Hatfield, who runs investment firm Infrastructure Capital Management. For one, they’re too slow: Earnings and government statistics are only published quarterly, while alt data can deliver insights in real time. For another, public data is often unreliable: Reports published by the U.S. Bureau of Labor Statistics have been getting less accurate for years, even before President Donald Trump fired the head of the bureau after a particularly weak July jobs report.

To supplement traditional information sources, Hatfield’s firm has turned to alt data. Analysts use information from Placer.ai, a start-up that harvests anonymized geolocation data from tens of millions of mobile apps, to see how many customers are walking into stores. They also use data from Similarweb, a company that tracks how many users are downloading apps and visiting specific webpages.

At Bloomberg, part of Richard Lai’s role is to identify and add new data sets to Bloomberg’s alt data platform. The task is “never-ending,” Lai says. As information becomes widely adopted by investors, its ability to deliver market-beating returns can dissipate, causing hedge funds to look for even better information. “This is something that will never stop,” he says. “Data is going to get better, it’s going to get faster, it’s going to get more accurate.”

A Better World?

Cesar Orosco, head of alpha equity investments within Vanguard’s quantitative equity group, says the prevalence of alt data is changing the art of investing. Decades ago, information was scarce, and researchers spent much of their time trying to find reliable data. Now, information is abundant—and the real edge comes from interpreting, rather than obtaining, data.

Many data providers and investment professionals argue that alt data is making financial markets more efficient. Orosco isn’t so sure. As investors wade through oceans of data, much of which sends noisy or contradictory signals, they can easily draw incorrect interpretations. Speculative bubbles and meme stocks endure, he notes. “Are the markets more or less efficient? I think the jury is still out,” he says.

Privacy remains a big concern. Every data provider interviewed by Barron’s stressed that the data they analyzed and sold was anonymous at every stage, and couldn’t be used to identify individuals. Data platforms such as Similarweb and Placer.ai say the information they collect from partners is already anonymized when they receive it. To protect privacy, Genlogs says its cameras instantly delete images of private vehicles.

“Trying to balance the privacy risk with the benefits is going to be a major question over the next five years or so, as AI capabilities become more robust,” says Patrick Schmid, chief insurance officer at the Insurance Information Institute, a research group for insurers. “Trying to mitigate personally identifiable information associated with the bits is going to be critical.”

Easthope says the biggest privacy concern comes from investors collecting information on executives and employees. Data about where CEOs are traveling—obtained, for example, by tracking their private jets—can provide useful investment information, while posing a risk to privacy and safety.

“There’s a voracious appetite for this data,” Easthope says. “And where the line is, I frankly don’t know. I think that line will get pushed.”

His business handles one out of every four stock trades. Our deep dive into the Wall Street firm of the future.

The most successful companies on Wall Street have been built by those with relentless ambition—and a strong wind at their back. Decades of deregulation helped growth-minded CEOs turn firms such as Morgan Stanley and Bank of America into behemoths. More recently, financial entrepreneurs have leveraged booming private markets to create the likes of Blackstone in private equity, Bridgewater Associates in hedge funds, and Andreessen Horowitz in venture capital.

Now a somewhat stealthier trend, fueled by the explosive growth of technology in finance, is behind a new wave of digital-first powerhouses such as Interactive Brokers Group

IBKR, Susquehanna International, Jane Street, and especially Citadel—a burgeoning Wall Street empire controlled by billionaire Ken Griffin.

Citadel is a two-headed business beast consisting of Citadel LLC, a $68 billion hedge fund operation best known for its top-performing multistrategy flagship Wellington, and Citadel Securities, a sprawling market maker that facilitates and engages in the trading of stocks, derivatives, and increasingly bonds. Citadel—Griffin chose the name because it “denotes a place of strength and protection,” he says—is defining the prototype of a next-gen, bulge-bracket firm, except that Citadel isn’t that bulgy, with just a fraction of the employees and overhead of the traditional Wall Street firm.

As of now, the boss is happy. “It’s incredibly satisfying to run one of the world’s most successful hedge funds and to witness the transformative impact of Citadel Securities on the capital markets around the world,” Griffin says. “Yes, I’m proud of that.”

Taken separately, first, Citadel the hedge fund is a huge deal even as a stand-alone. Wellington (not related to Vanguard Wellington Fund or Wellington Management) has been a superstar, producing annual average returns of 19.2%, net of fees, since inception in 1990—nearly two times the market. A million dollars invested in the fund back then is worth $452 million today.

Even though Griffin says he spends the majority of his time working on the hedge fund’s investment portfolio, arguably the hotter ticket is Citadel Securities. CitSec, as it is known, is a complex, sometimes controversial, ever-evolving endeavor—which, Pac-Man-like, is on a seemingly inexorable march across capital markets, gobbling up market share in options, equities, Treasuries, and corporate bonds, and now expanding to Europe and Asia. Example: CitSec recently bought Morgan Stanley’s U.S. equity-option market-maker business, leaving no major banks in the market-making business.

Citadel Securities says it now trades 25% of all U.S. equities, including 35% of retail flows plus 45 billion options quotes a day, and is a top-three trader in U.S. Treasuries and swaps. In total, it executes $652 billion in notional trades a day. The goal is clear. “Building the capital-markets firm of this generation is a vision that is increasingly becoming a reality,” says Citadel Securities CEO Peng (pronounced “pung”) Zhao, a Ph.D. in statistics from the University of California, Berkeley. (Griffin serves as nonexecutive chairman of CitSec.)

“This is a very different company than most people understand,” says Alfred Lin, a partner at venture-capital firm Sequoia Capital who sits on Citadel Securities’ board (and whose brother happens to be the head of global fixed income and macro at Citadel the hedge fund). “Citadel is taking math and their distribution and technology power to price risk using techniques not traditionally used on Wall Street.”

While technology has been absolutely critical to Citadel’s success, so too has Griffin’s strategy. “You don’t want to go up against the Wall Street incumbents,” he says. “Instead, you want to understand where the market is heading and position yourself there before the incumbents arrive.” The incremental rise of electronic trading allowed Citadel to move step-by-step ahead of names like Goldman Sachs Group and Morgan Stanley

MS in a number of trading businesses.

Griffin also makes all kinds of headlines. A Republican who has given hundreds of millions mostly to GOP candidates and causes, Griffin has praised and criticized Trump. Just this past week, Griffin told Barron’s: “I hope President Donald Trump appreciates that while he can score political points by attacking Jay Powell, ultimately the independence of the Fed is of the utmost importance to the American and global economy.”

Meanwhile, Griffin, 56, has been adding to his personal portfolio at a stunning pace, including buying over a billion dollars worth of real estate (in New York City, the Hamptons, London, St. Tropez, Hawaii, and multiple properties in South Florida, including $400 million in Palm Beach, according to The Wall Street Journal). His art collection, estimated to be worth close to $1 billion, includes works by Picasso, Van Gogh, and Warhol, and he has bought priceless historical American documents, including rare copies of the U.S. Constitution, the Bill of Rights, the Emancipation Proclamation, and the 13th Amendment (signed by Abraham Lincoln). Then there’s the $45 million stegosaurus.

Griffin’s philanthropy, now directed through an entity called Griffin Catalyst, exceeds $2 billion and includes funding vaccine development during the pandemic and helping create Operation Warp Speed. On the hipper side, he recently donated $2.255 million to Mr. Beast’s water philanthropy after the YouTube superstar called him out on the Today show. “It seems very important to Ken that the world knows how wealthy he is,” says a business associate. “A lot of other people go to great lengths the other way.”

The totality of Griffin’s world is dizzying. The billions upon billions of hedge fund investments, market-making activities, and personal assets are markers of a man with great aptitude and perhaps even greater ambition.

Along the way, Griffin and his companies have encountered friction, false starts, falling outs, fines, and failure. The hedge fund dropped 55%—losing $9 billion of clients’ money—during the global financial crisis, and was at death’s door. CitSec tried and failed to get into investment banking. The market maker has had a number of run-ins with regulators. Yet now, after more than 30 years in the business, the tumblers have been falling into place.

A decade ago, Griffin was worth $6.1 billion, according to Bloomberg; today his net worth has ballooned to $48.3 billion, making him the world’s 31st-richest person, by dint of hedge fund payouts and an 85% stake in that business, plus his 80% piece of the market maker—the latter being valued at $22 billion three years ago after Griffin sold a 5% stake to Sequoia. Never mind the real estate and art.

Wealth accumulation by longstanding lieutenants such as Griffin’s right-hand man and chief operating officer of the hedge fund, Gerald Beeson, who joined in 1993 as an intern out of DePaul University, and Zhao, who joined in 2006, is likely significant as well. Not that making a career at Citadel is easy. Both the hedge fund and CitSec look to hire what Griffin calls “great athletes,” and are known to be workplaces where elbows are sharp and fools aren’t suffered gladly—or really at all.

“I thought we ran hard at Goldman,” Pablo Salame, the co-chief investment officer of the hedge fund, who came from Goldman Sachs in 2019, said to a colleague. “And then I showed up here, and I realized there’s a whole different gear.” (Griffin is co-chief investment officer and CEO of the hedge fund.) “I would tell my team, you’re playing for Real Madrid,” says a former Citadel executive. “You don’t get to keep your spot on the field if you’re not producing.”

“Ken would call you on a Sunday night at 11 p.m. and he might be screaming and yelling at you, but he was working,” says another former employee. “He demanded 150%, and nothing else in your life should matter.”

“Ken’s not yelling at you, he’s yelling with you,” a person close to Citadel joked.

“Citadel Securities and hedge fund Citadel are highly performant places to work,” says Matt Culek, CitSec’s COO, who has worked at the firm for 13 years. “This is a place to come if you have a lot of confidence in your ability and want to challenge yourself.” It’s true that Citadel hardly has an issue attracting aspiring masters of the universe. “We had over 100,000 applicants for our summer intern program, and our acceptance rate was 0.4%,” says Culek. “People are falling over themselves to demonstrate they deserve to be here just for the summer, and then some subset of them get to come back full time.”

Griffin was STEM-smart and an achiever from his earliest days, growing up in Boca Raton, Fla., where he was president of his high school’s math club. He graduated from Harvard University with an economics degree in three years. Chapters of Griffin’s origin story have become the stuff of Wall Street legend, like convincing Harvard to let him install a satellite dish on the roof of his dorm so he could trade convertible bonds.

After Harvard, Griffin moved to Chicago, where Frank Meyer, a pioneering hedge fund investor, mentored him and helped seed Griffin’s hedge fund. “The best advice I’ve ever gotten was from Frank Meyer, who in the early days of my career really pushed me to think big,” says Griffin. (Meyer also pressed Griffin to build a multistrategy platform instead of a single-strategy fund.) Griffin stayed in Chicago until three years ago, when he says he became disgruntled with the crime and business environment and relocated his companies to Miami—a triumphant return of South Florida’s most successful financier native son.

As he built his businesses, Griffin leaned heavily into his math and computer science background, applying evolving technology along the way. “The term HFT [high-frequency trading] was coined here,” says Zhao, who adds that a physicist working at the firm came up with the name for a strategy he created. Though Citadel Securities used to be known mostly as a high-frequency shop, Zhao says that today HFT is “part of the core competency you need to have as a modern-day market maker, but it’s becoming less and less a business model.”

After the hedge fund’s meltdown during the financial crisis, Griffin rallied the troops, and by 2012 he had led the fund back to its high-water mark. Performance has been strong. Over the past five years, Wellington has had annualized net returns of 23.6%, according to the Global Investment Report, versus a 14.5% annualized total return for the S&P 500. The hedge fund has returned more than $25 billion to investors over the past eight years—a mixed blessing for the funds’ limited partners, who then have the problem of where to reinvest that money.

As a multistrat hedge fund, Citadel employs a podlike structure, where individuals or groups of money managers pursue their own thesis strategies but with strong central controls. The firm isn’t wedded to a single asset class or investment strategy and style, which allows Salame and Griffin and the management committee to shift the emphasis of the fund. Instead of a typical 2%-of-assets management fee, Citadel “passes through” its direct costs, such as employee salaries, which can amount to up to 7%. And it charges 20% of upside as well. Citadel is unique in that it is publicly rated investment grade by S&P Global Ratings, which, as of May 1, rated it BBB-, one notch above junk, and “stable.”

“We want to generate returns that are diversifiable and where there is liquidity,” says Salame, an Ecuadorean who’s an aficionado of Japanese whiskeys. “You have to constantly review whether your capital allocation and portfolio shape is optimal today, even though it was optimal a day ago.” As a former Goldman colleague says, Salame was “demanding and one of the smartest people I’ve ever worked with.”

The fact that Griffin owns the two Citadels makes for a singular and potentially conflicted structure. Executives on both sides of the house, as they describe it, stress that there is zero communication between the two, and that no trading information from the market-maker business passes over to the hedge fund. The two firms do occupy the same office buildings in some cities, such as New York, where both are slated to move into a proposed 1,600-foot-tall Park Avenue tower, sharing some back office functions and even a logo. Furthermore, Citadel Securities does, in fact, use trading information from its market making business, not in the hedge fund, but in Citadel Securities itself.

Like other market makers (also known as nonbank liquidity providers), such as Jane Street and Virtu Financial, CitSec receives orders from retail and institutional clients. It processes customers’ trades by executing them mostly on an exchange or sometimes on an alternative trading system such as a dark pool. Citadel can make money off the spread between the bid and offer, but more important, it can use those securities in myriad strategies including hedging, mitigating risk, or trading for its own account. It’s a hideously complex, esoteric business, but a very profitable one. In the first quarter of this year, CitSec had $3.4 billion in net trading revenue, up some 45% from the same period last year, while net income climbed 70% to $1.7 billion, according to Bloomberg.

“Ken tells an amazing story about when he developed conviction on a trade, which he was right on,” says Billy Hult, CEO of Tradeweb Markets, a bond trading platform of which Citadel is a customer. “When Ken went to take the trade off, he realized how much money the market maker was making by unwinding his trade, and he said, ‘Wow, there are two great businesses to be in—the business of investing, and the business of market making—and they’re both really lucrative.’ ”

CitSec’s market-making business also entails the somewhat controversial business of payment for order flow, much scrutinized during the GameStop imbroglio in 2021, where Citadel pays retail brokerage firms like Robinhood Markets and Charles Schwab to process their trading orders. In the first quarter of 2025 alone, Citadel paid brokers $388 million—much of that for options contracts, according to Global Trading —more than any other market maker. Citadel says it gets the most orders because it has the best execution, and that the money it pays to the brokers is essentially rebating back part of the spread. Those payments allow brokers to offer rock-bottom-priced or even free trading to investors—which begets more trading, which benefits Citadel.

Trading data, which is nonproprietary, can be fed into Citadel’s massive computing stack, where 260 Ph.D.s have access to some 100 petabytes of data—more than the entire collection of the Library of Congress. Citadel data scientists and traders can use that information to identify inefficiencies between securities and arbitrage opportunities to obviate risk and make trades. Some are longer-term trades, says Zhao, while an HFT strategy, in which time is measured in 500 millionths of a second, makes thousands of small trades. Profiting from the spread on customers’ trades, mitigating risk, and trading for its own account are closely intertwined. Revenue from those activities “can’t be separated in a rational way,” according to Zhao.

Market conditions recently have been ideal for Citadel Securities. Citibank says that year-to-date average daily volumes through July are 17.2 billion shares, a record high and up over 2.5 times from 2017. So far in 2025, stocks below $5 have represented 31.7% of total volumes, reflecting the latest meme-stock craze. And zero-day-to-expiration options are booming as well. All that trading means more volume for Citadel.

“The equity market is robust in pricing, but also reflects that the U.S. government is running a very large fiscal deficit, which is incredibly stimulative for the economy and healthy for corporate profits,” Griffin says. “That, combined with a weaker dollar, has created tailwinds. There is one salient issue in the equity market now: How much of the hype of AI will translate into the reality of a more productive, more prosperous future?”

Going forward, Citadel has limitless possibilities, says Sequoia’s Lin. “They can invest. They can trade and make a market. They can use math to help trade, absorb, and price risk better or help clients do that. They can provide advanced analytics and technology. They can provide intelligence to banks and to customers.”

“We’re still in early innings, even for some of our core products,” says Jim Esposito, the president of Citadel Securities, who came over from Goldman last year. “In equities, we’re skewed to the U.S.; in fixed income, we’re just getting started. I’m spending time with Ken and Peng thinking about geographic and product expansion. We’re everybody’s favorite strategic partner to chat with, from technology platforms like Google to private-equity firms like Apollo [Global Management].”

Espo, as he is known, is amping up client-facing efforts at this tech-first company as it pushes more into bond trading and European operations, which can require high-touch relationships with senior clients and government officials.

“We’re seeing higher levels of uncertainty in the world,” says CitSec COO Culek. “That’s going to increase the need for price discovery, which will lead to more market activity.” Culek also points to strength in retail trading, event-based derivatives (trading on elections, economic data, or policy decisions), and crypto. “We’re bullish on the growth of that set of opportunities,” he says. “We see revenue others are already making that we can capture over time, and we can envision entirely new revenue in the future, some of which we are going to proactively create ourselves.”

Griffin continues to be thoroughly engaged. “Some people who have Ken’s success at his age start doing things like getting married in Europe,” says a top executive at a major financial institution. “But Ken is uniquely still driven. That’s a really important factor in why they succeeded and why they’ll continue to succeed.”

While one generation of Wall Street entrepreneurial titans, including the likes of Bridgewater’s Ray Dalio and Blackstone’s Steve Schwarzman, is winding down, another, with Griffin at the fore, is still gearing up. “Where we are today represents a phenomenal starting point for where these businesses will go over the next century,” says Griffin.

With ambition like that, and a digital wind in his sails, what sounds audacious might just be plausible.

Favourable tax regime is drawing wealthy newcomers and changing the city’s dynamic

Walking down the cobbled streets of Milan’s trendy Brera district on the last day of March, one senior banking executive spotted three international removal trucks.

“It was incredible,” he said of an influx of new residents in the city ahead of the end of the UK tax year on April 5. “There was an explosion of arrivals.”

Italy’s welcoming tax regime has drawn throngs of wealthy newcomers to the country’s financial centre, bringing new strains to the city, particularly in a real estate market where demand far outstrips supply and that is now the focus of a sprawling corruption investigation.

But it has also given Milan a buzz some liken to London in the 1990s — with a dolce vita twist.

Milan’s transformation has its roots in a series of 2016 tax breaks under Italy’s then prime minister Matteo Renzi, whose centre-left administration set out to reverse the country’s brain drain and lure wealthy foreigners.

But the shift has gained momentum, particularly in the past 12 months after the UK’s decision to abolish its 226-year-old rules for non-domiciled residents, exposing their overseas assets to a 40 per cent inheritance tax, and their foreign income and gains to the wider British fiscal regime.

At the same time, Italy has been rolling out the red carpet to the world’s wealthy. A new foreign resident — or a returning Italian who has lived abroad for at least nine years — can pay a flat tax of €200,000 a year on any foreign income and assets for up to 15 years, and be fully exempt from inheritance tax on foreign assets during that period. 

“A few years ago the only people that lived in Milan had known each other since they were children, it was very local,” said Lydia Forte, group director of food and beverage at Rocco Forte Hotels. “Now, there are a lot of people moving there who have no connections to Italy.” 

Those who have left London for Milan include Nassef Sawiris, Egypt’s richest man and co-owner of English football club Aston Villa; Richard Gnodde, vice-chair of Goldman Sachs; and Yoël Zaoui, co-founder of advisory boutique Zaoui & Co. Rolly van Rappard, co-founder of private equity group CVC Capital Partners, is weighing a move, while Bernard Arnault’s son Frédéric is moving between Paris and Milan having taken the top job at LVMH-owned Loro Piana.

They are just the tip of the iceberg. The flat tax scheme has attracted several thousand people, while more than 100,000 individuals, mainly Italians, have benefited from a scheme for those arriving from overseas that gives a 50 per cent reduction on taxable Italian income, with most moving to Milan.

“The big market is people who are 45-70 years old,” said Gary Landesberg, co-founder of The Wilde, one of a new crop of London-style members’ clubs that have opened in the city in recent years, adding that “you’re not just talking about billionaires”.

Nadim Nsouli, founder and chief executive of Inspired Education Group, said Dubai and Milan were the top destinations for the roughly 200 pupils out of a total of 4,500 at its UK private schools who have relocated overseas in the past few years. Of new joiners at its 10 schools in Italy, four of which are in Milan, 45 per cent are typically foreign nationals, with the largest cohorts coming from the UK, the US and France. 

While those who have quit London for Milan give various reasons for their moves, many speak of a combination of the “push” factor from the UK and the “pull” factors of Italy, with fiscal sweeteners only part of the equation.

Citing the quality of life in the Italian city as a draw, one private equity executive who has made the switch said he “wouldn’t do this to move to Dubai”, where there is no personal income tax, and that “if Frankfurt had offered the same deal I would not have gone to Frankfurt”.

With the UK recently raising the tax on carried interest — private equity managers’ profits on successful deals — from 28 per cent to an effective 34 per cent by treating it as trading income, Italy’s flat rate of 26 per cent has made it an attractive destination for PE professionals and venture capitalists who are not on the flat tax regime. 

As part of a wider European expansion, alternatives firms including CVC, Preservation Capital and Ares have been opening and expanding offices in Milan in recent years, joined by hedge funds, including Capstone Investment Advisors and Steve Cohen’s Point72 Asset Management. Private capital executives said they saw opportunities to invest in and lend to Italy’s abundance of family-owned mid-market businesses.

This trend has given bulge-bracket banks such as Goldman Sachs added incentive to widen their own footprints in the city to service rich clients. Such moves come as international lenders have been shifting activity from London to Paris, Milan and Frankfurt to continue serving EU clients post-Brexit, after the UK lost so-called passporting rights. 

Some of those who have moved to Milan are part of the peripatetic super-rich for whom the Italian city is one of several places they might spend a few months a year. Others form part of a younger generation who are putting down roots.

“Milan is a great city to live in and has amazing connectivity,” said John Nery, the 41-year-old managing partner at private equity firm Squircle Capital, who moved to Milan five years ago from Qatar. “Portofino is a two-hour drive; you can be having lunch on the terrace of Villa d’Este on Lake Como in 45 minutes; and in three hours you can be in St Moritz, Megève or Verbier.”

The international newcomers have added depth and variety to Milan’s social scene, reflected in a clutch of new venues that cater to them. Before The Wilde opened its doors last year, international members club Casa Cipriani launched in Milan in 2022, while Soho House is developing an outpost in the city. Contemporary art gallery Thaddaeus Ropac is opening a space in the Palazzo Belgioioso this autumn, and Rocco Forte Hotels’ Carlton Milan is due to open in November.

Some Milanese complain that the influx has made their city “less authentic” and “a little bit over the top”. One banker said tensions had arisen at his company because new arrivals from the UK were on London salaries, far higher than their local counterparts, and criticised the new members’ clubs as “not really the Italian way of doing business”.

A second local dismissed the clubs as being full of bankers and private equity executives, and only existing for those who could not get into old-school Milanese gentlemen’s clubs such as the Clubino and the Circolo dell’Unione.

Even those who are enamoured with Milan complain of poor air quality and few parks, and note that the city empties out at weekends and in August. And while Milan is having a moment, Italy is not the most thriving of global economies and cannot offer the same opportunities for ambitious young people as there are in places such as the US or the UAE. 

“It’s still very bureaucratic,” said Nsouli of Inspired Education Group, notably around hiring and labour laws. “The bureaucracy is one thing they need to address if they really want to become a global city.”

Nowhere is the flow of newcomers more keenly felt than in the real estate market, where prices have been pushed up by people accustomed to Kensington, Notting Hill and Mayfair prices. Several suites at the Four Seasons and the Mandarin Oriental hotels in Milan’s historic centre have been occupied by financiers who relocated from London. 

Milan’s property scene has been struggling to satisfy demand for “trophy assets”, said Danilo Orlando, head of residential at estate agency Savills Italy.

Purchase prices for 600 square metre plus penthouses in central locations with pool, gym and concierge start at $8mn-$10mn, according to Savills, while rents in Milan’s prime residential sector have risen more than 14 per cent over five years, against a 7 per cent increase in Rome. However, Milan remains far behind London, with an average price per square foot of €1,520 against €1,920 in the UK capital.

The news is not all positive. Manfredi Catella, who as chief executive of developer Coima helped redevelop the former industrial Porta Nuova district into Milan’s most exclusive neighbourhood, was among six people placed under house arrest in July as part of a sprawling probe into Milan’s rapid real estate expansion. Although all six were released this month following an appeal, they and another 20 people, including mayor Giuseppe Sala, remain under investigation.

Coima is redeveloping historical buildings in the city centre, including turning a block between the Mandarin Oriental and Bvlgari hotels into luxury residences and offices.

Catella said internal checks had been carried out to confirm “the regularity” of the company’s actions and these could be “clearly represented in court”. Sala said in July he was “shocked” and that he “disavowed” the prosecutors’ interpretation of events.

The legal developments are unlikely to stop the influx of newcomers and their need for housing. Marco Cerrato, a partner at law firm Maisto e Associati, said one client had difficulty finding a large house in the city “because Milan is made up of apartments”, so instead bought one an hour’s drive away in Lugano, Switzerland.

But when it comes to the hotels, restaurants and other luxury services that the new arrivals desire, Cerrato believes the city is “fully equipped” because of the fashion and design contingents. Milan, he says, “was already ready”.

France, Italy, Spain and Poland among countries requesting support from project designed to spur defence spending

The EU’s €150bn loans-for-arms programme is set to be spent in full after 19 member states, including France and Poland, requested funding, as Brussels seeks to spur a surge in defence spending.

The project loans cash borrowed against the EU budget to member state governments to jointly spend on critical military purchases such as air and missile defence systems.

It was proposed earlier this year as part of a Europe-wide effort to dramatically increase defence spending in response to Russia’s war against Ukraine and US President Donald Trump’s demand for the continent to spend more on arms.

‘‘We have reached full subscription,” European Commission president Ursula von der Leyen said on Friday. “We are delivering the capabilities that Europe needs most.”

The funds must be spent on joint purchases by EU governments of defence products in areas identified as gaps by the commission, such as air and missile defence products, cyber systems and drones.

The commission will now assess the individual bids for the so-called SAFE project from capitals, and take decisions on how best to divide the €150bn. Initial disbursements could begin this year, officials said.

Italy and Spain are also among the countries that have applied for funding under the instrument.

“There is a lot of work ahead of us, but we are on the right track,” von der Leyen said during a visit to Riga in a press conference with Evika Siliņa, Latvia’s prime minister. “We have European common defence necessities.”

“Many member states have indicated that they will also use it [to purchase arms] to support Ukraine . . . That is a true European success,” she added.

The initiative comes alongside a pledge by European members of Nato to increase their defence spending to 5 per cent of GDP over the next decade — a promise demanded by Trump as the price of continued US engagement in the continent’s security.

It is designed to promote the purchase of EU-manufactured products, with clauses that limit the amount of third-country components, amid concerns among some European capitals about the continent’s heavy reliance on US-made weapons.

The project was proposed by von der Leyen earlier this year alongside another policy that exempts defence spending from the EU’s rules governing the level of deficit spending by its members.

Riga is the first stop on a four-day trip by von der Leyen to seven of the EU’s easternmost states close to Russia.

Transaction to split grocery and sauces could be announced as soon as next week

Kraft Heinz is nearing a plan to break up the company, reversing the 2015 Kraft and Heinz merger.

The split could result in one entity with Kraft products and another with sauces and spreads like Heinz ketchup.

Kraft Heinz KHC 2.18%increase; green up pointing triangle is closing in on a plan to break itself up, according to people familiar with the matter.

The decision would effectively undo much of the work done from the infamous merger of Kraft and Heinz in 2015, a deal orchestrated by Warren Buffett and Brazilian private-equity firm 3G Capital Partners.

A transaction could be announced as soon as early next week, the people said, cautioning the plans and timing could still change at the last minute.

The Wall Street Journal reported in July that Kraft was planning to spin off a large chunk of its grocery business, including many Kraft products, into a new entity that could be valued at as much as $20 billion on its own. That would leave a company housing goods such as sauces and spreads like Heinz’s namesake ketchup and Dijon mustard brand Grey Poupon.

The company is betting that two separate units would be in total worth more than Kraft Heinz’s roughly $33 billion market value. Shares are up since the Journal’s report in July.

Other details around the pending breakup couldn’t be learned.

Kraft has lately been giving priority to its faster-growing offerings like hot sauces, dressings and condiments, which are more in line with consumer preferences today than processed lunch meats and cheeses.

Kraft Heinz said later in July it was still evaluating potential strategic transactions aimed at boosting shareholder value. The company emphasized that there’s no guarantee any changes or deals will materialize.

“Our board is working with urgency on our evaluation of those strategic options,” Chief Executive Carlos Abrams-Rivera said.

The split would come as corporate breakups are coming more regularly in the food and beverage industry.

Kellogg in 2023 split into two companies, a snacks behemoth named Kellanova and a North American cereal business called WK Kellogg. Keurig Dr Pepper is unwinding a 2018 transaction that had united a coffee maker and beverage company under the same roof.

In a hunt for growth, big food and beverage companies are being forced to re-evaluate their portfolios and come up with other ways to excite investors, including through big deals.