Citadel: the hedge fund that became an energy giant
From the ashes of Enron, Ken Griffin built a commodities empire that extends beyond financial trading
Haynesville, a small town in northern Louisiana, is mostly known for two things — its annual butterfly festival and the gargantuan Jurassic-era natural gasfield that lies more than 10,000 feet below its houses.
The Haynesville Shale field is both deep and wide, stretching out over 9,000 square miles in Louisiana, Texas and Arkansas. With an estimated 152mn barrels of oil and 47.9tn cubic feet of gas reserves yet to be discovered, it is one of the biggest in the world, and one of the main reasons why the US has become the world’s biggest exporter of liquefied natural gas.
The field was first exploited in 2008, and there are now 62 rigs dotted across the region. However, the biggest owner and operator of gas drilling rigs at Haynesville is not an energy company, but a hedge fund: Ken Griffin’s Miami-based Citadel.
Although Citadel is mostly known for its huge bond market bets, skilled stock pickers and cunning arbitrage trades, its commodities business has become the hedge fund’s crown jewel over the past decade. And as Haynesville’s landscape of rigs shows, it has evolved from a primarily financial actor — buying and selling derivatives contracts on oil, gas, corn, gold or soyabeans — into a player in physical commodities and America’s vast energy market.
Some insiders say that if you flick a light switch somewhere in California today, there is a decent chance that the electricity somehow comes from Citadel.
We are a leading trader in power and natural gas and have a significant business in the oil and oil products markets,” Griffin says. “We continue to focus on what steps we need to take in the commodities market to position ourselves to meet the needs of consumers and producers.”
He has previously estimated that Citadel’s commodities business has contributed over $30bn to his hedge fund over the years — and that was before several bumper years for the unit.
Rivals believe the division is one of the things that has helped distinguish Citadel since its inception in 1990. DE Shaw and Izzy Englander’s hedge fund Millennium have made roughly $80bn and $70bn respectively in that time; Citadel has generated net returns of $90bn.
Citadel Commodities has historically been mostly focused on energy — and especially US energy — where its more systematic, data-driven “quantitative” approach to trading is best suited. However, there are signs that its ambitions are growing, with a series of acquisitions and new hires in Europe and Asia that take it into turf traditionally dominated by the big specialised commodity merchants such as Glencore — and open up new potential pitfalls.
Commodities are an unpredictable business, with different challenges than those that dog more traditional financial markets. Profits can be exceptionally volatile. After blockbuster results between 2022 and 2024, people familiar with the matter say Citadel’s commodities profits have been more muted in 2025 and so far in 2026. More competition is also coming, with several big rivals building up their own commodities businesses.
Citadel’s growing footprint in politically sensitive energy markets in the US, Europe and Asia-Pacific also entails dangers that can be hard to quantify for the hedge fund’s mathematical analysts and traders. “There’s huge reputational risk,” observes one former Citadel executive. “For example, if half of California suddenly loses power because of something that can be traced back to Citadel then that would obviously be bad.”
Opportunity in a collapse
At 2am on Sunday December 2 2001, Enron filed for the biggest bankruptcy in American history. That same day, Griffin chartered a Gulfstream jet and immediately dispatched 16 of his top executives directly to Houston to pore over the corporate carcass.
Over the next few days, they quietly but intensely interviewed almost all of Enron’s energy traders and analysts, to figure out what the company did, how the US energy markets worked and exactly how Enron’s traders had made (and lost) fortunes in the years leading up to the debacle. UBS eventually acquired Enron’s North American energy trading business, but not before Citadel had swiftly poached several of its top quantitative analysts.
That team became the cornerstone of Citadel’s new and now hefty commodities business. “UBS bought the business, except for the research team. We’ve made, I don’t know, $30bn in commodities since then, and UBS shut the business down,” Griffin told Yale students in 2023.
The knowledge that Griffin gleaned from the exhaustive interviews with Enron’s rattled energy team arguably proved just as valuable as the people they lifted out of its bankruptcy.
John Arnold, Enron’s head energy trader at the time, saw the operation in action, though he declined to join Citadel. “Other companies set up a few interviews with Enron’s senior people. Citadel interviewed seemingly everyone in the trading operation, all functions at all levels,” he said in 2025. “They built the framework for how to enter the energy business.”
Citadel Commodities was formally established in 2002. The first public sign of Griffin’s ambitions for the business did not come until 2006, however, when the energy-focused hedge fund Amaranth Advisors collapsed after bad bets on natural gas. Citadel banded together with JPMorgan to acquire Amaranth’s entire trading book. Soon after, Citadel bought JPMorgan’s share too and booked a handsome reward for its gumption.
“Ken got very lucky with Amaranth, but he did the work,” observes one hedge fund rival, recalling how Griffin bragged about a “meteorology room” at Citadel as early as 2004. “Ken has been into commodities for a long time.”
Citadel nearly came undone in the subsequent global financial crisis, but the post-crisis regulatory assault on banks helped lay the ground for its subsequent renaissance.
Most obviously, the closure of “proprietary” trading desks at investment banks was a boon for Citadel, which eagerly snapped up many of the best traders. Less appreciated is how the hedge fund’s commodities business was then able to exploit the retreat of big banks from natural resources markets.
When Lehman Brothers went bust, it owned a 500,000-pound stockpile of radioactive uranium “yellowcake”, underscoring how the investment banking industry had piled into physical commodity trading in the preceding decade on top of the usual financial securities.
Goldman Sachs and Morgan Stanley were the two powerhouses of the business, and were often collectively called the “Wall Street refiners” for their blend of physical and financial trading in natural resources. But just a few years after the financial crisis, even they had to gradually shutter, scale back or sell off swaths of their commodities businesses.
In contrast, Citadel kept bulking up. In 2014 the hedge fund quietly set up Citadel Energy Marketing, a business that acts as an intermediary between energy producers and consumers, getting paid to shuffle natural gas, oil or even raw electricity from those that produce it to those that need it. Last year, CEM bought and sold almost 4,000 trillion British thermal units of natural gas, according to a regulatory filing with the Federal Energy Regulatory Commission. That is the equivalent of about 11 per cent of the total US natural gas consumption in 2025. That puts it on par with Vitol, one of the biggest commodity houses, and makes it a bigger US natural gas trader than Shell, according to data compiled by Bloomberg.
“Hedge funds used to be fringe players. We didn’t view them as competitors,” recalls Simon Greenshields, previously head of commodities at Morgan Stanley and now head of Phibro. “But when banks started having their regulatory issues it created a void that hedge funds and the commodity merchants took advantage of.”
Data, technology and risk
Insiders say that the next big iteration for Citadel Commodities came when Griffin in 2017 poached Sebastian Barrack from the Australian bank Macquarie to lead the business.
Barrack, a rangy Australian and hobby mountaineer — he climbed Kilimanjaro while on his honeymoon — started his finance career at Bankers Trust’s legendary derivatives unit. When the bank suffered losses in the 1998 Russian debt default and was acquired by Deutsche Bank, Barrack and a handful of his colleagues instead went to Macquarie. There he traded virtually every commodity in every region, before joining Citadel with a brief from Griffin to aggressively expand the business.
Echoing Griffin’s willingness to be bluntly ambitious, Barrack’s vision for the business is unashamedly grand. “Our mission is to have the strongest commodities business in the world,” Barrack says. “Not part of a hedge fund with a side business in commodities, but a leading participant in every market we touch.”
One of Barrack’s first big moves was to snap up about 20 people from a weather-focused hedge fund called Cumulus that was shutting down in 2018 — another example of Citadel taking advantage of distress elsewhere in its industry.
That brought top-tier weather forecasters into Citadel and lifted the size of the commodities division to roughly 75 people at the time. More people have been added to hone its quantitative approach to weather modelling and make its portfolio managers more comfortable with taking big swings.
Barrack argues that the emergence of “alternative data” — such as satellite imagery of oil depots, crops and mine activity, near real-time shipping data and improved weather forecasting — has been as important to the growth of Citadel Commodities as the retrenchment of investment banks.
“Historically, this was an opaque industry, with not a lot of information and available data unless you physically extracted the resource, moved the cargo or refined it,” Barrack says. That changed significantly during the 2010s, he says, and new forms of information became a “significant” input into Citadel’s commodities business. “We are the most sophisticated user of such data,” Barrack claims.
Citadel Commodities now has over 260 traders, portfolio managers and analysts around the world, supported by about 100 dedicated engineers, who are mainly active in natural gas, power, weather derivatives, agricultural products, oil and products refined from oil. Insiders say that its systems process over 17 terabytes of data a day on average.
“Seb Barrack really scaled it up, and they had four to five really big years after that,” says one former Citadel executive. “They take a lot of risk, and when it pays off it pays off big.”
One such pay-off was in 2022, when Citadel Commodities made an estimated $8bn profit largely through aggressive European natural gas trades when Russia invaded Ukraine. That made up about half of the hedge fund’s profits for the year. A person familiar with the matter said that the team led by Chris Foster — a senior gas-focused fund manager in London — made about $2bn alone.
The performance was enough to finally displace Ray Dalio’s Bridgewater from the top of the list of the most profitable hedge funds in history, and for Foster to gift his alma mater Mansfield College, Oxford, £25mn, the biggest donation in the college’s almost two-century history.
Citadel Commodities followed up its blockbuster year with reported profits of about $4bn in both 2023 and 2024. Profits have been more subdued in 2025-26, but people familiar with the matter say the business has remained healthily profitable.
Citadel, Apex predator
There are certainly no signs that Griffin has become more cautious on the commodities business as its results have weakened. In fact, the hedge fund has made a series of eye-catching acquisitions over the past two years that indicate the American billionaire wants to expand and reinforce his natural resources empire.
In March 2025, Citadel acquired Paloma Natural Gas, a Houston-based energy company with 57,000 acres in the Haynesville Shale basin, for a reported $1bn. The company is now called Apex Natural Gas — Griffin bought a Stegosaurus skeleton by the same name in 2024 — and is expanding aggressively. Last December it also acquired some of Comstock Resources’ natural gas assets in Texas, and more Haynesville fields from Azul Resources.
This has transformed Citadel into one of the largest players in the Haynesville Basin, with 14 rigs now in operation, up from just two in early 2025 and five more than its nearest rival.
But Citadel has made big moves in Europe and Asia too, acquiring Japanese wholesale power company Energy Grid in 2024, a German power trading firm called FlexPower last October, and building up an Australian trading hub in Brisbane focused on trading electricity derivatives — Citadel Commodities’ 14th office around the world.
Both acquisitions intrigued outside observers. Energy Grid was primarily a risk-management consultancy for Japanese businesses, but the country is one of the world’s biggest energy importers, its electricity market was liberalised in 2016 and EnergyGrid’s CEO Yohei Jozaki is a former energy trader at Enron, Nomura, Morgan Stanley and Goldman Sachs. Meanwhile, FlexPower is focused on trading and storing power produced by renewable energy in Germany and a handful of other European markets, and brags of its ability to take “rapid and audacious decisions on short-term markets”.
Europe is now “meaningful” for Citadel’s commodities business, according to Griffin. “Collectively it’s one of the largest economies in the world and you have to give the Europeans credit” for weaning themselves off Russian gas, he says.
There are signs that Citadel is even moving into areas it has historically avoided: commodities such as base metals and certain agricultural products, where rivals say it is at a disadvantage to giant commodities trading groups like Glencore or Cargill, which often own mines, meat processing farms or refiners. “Ken likes to live in a world where everything can be automated and electronified, and that’s not always possible in the commodities world,” the former Citadel executive says. “They’ve invested heavily in quant, and that’s the ethos of the building.”
However, earlier this year Citadel poached Ylan Adler, head of commodities at Brazilian hedge fund SPX, to build a team focused on metals and agriculture. “Metals is an interesting market,” Barrack says. “It went through a period of oversupply and volatility was incredibly low, so it was not a priority for us. We will also not enter a business until we hire the right people. But when we find them, we resource and build a team around them.”
A former executive from Citadel Commodities likens Griffin’s long-term approach to building the business to football club Arsenal’s patient, deliberate approach to building a Premier League-winning team under Mikel Arteta, its Spanish manager. “Overall, it’s just the same as Arsenal in every way except the ball and the middle manager,” he says.
Toil and trouble
Citadel’s deepening foray into commodities is not without its risks, however. Back in 2014, the US Senate released an excoriating report on how big banks used their dual roles in financial and physical commodity markets to give themselves an edge and push around the prices that Americans paid.
“Through their commodities activities, some of the country’s largest financial institutions have taken on arguably excessive levels of risk, raised suspicions of market manipulation, and potentially gained unfair trading advantages,” the late senator John McCain thundered.
JPMorgan, Goldman Sachs and Morgan Stanley — the three banks singled out in the report — all disputed the allegations. Nonetheless, all three banks subsequently retrenched their once-huge and multi-faceted commodity businesses.
This helped Citadel quietly expand its own commodities business. But the episode underlines one of the dangers the hedge fund faces as it expands: that trading barrels of oil, ingots of metals and bushels of corn as well as their derivatives can be lucrative, but it also opens up temptations and reputational risk.
“Do we understand and care about important issues such as reliable and affordable energy? One hundred per cent,” says Barrack. “It’s very important for us to understand what regulators are thinking, and how we can actually help each of these markets function more effectively.”
Phibro’s Greenshields points out that this may not always help when the political winds shift. “Even if you are as pure as driven snow, even just making a lot of money can subject you to investigations for ‘nefarious’ activities,” he says.
Griffin is unconcerned, noting that “politicians often try to blame somebody else for policy shortfalls”. He argues that Citadel’s presence is good for the commodities ecosystem, even if it might occasionally lead to big paydays for the hedge fund.
“The challenge is that nobody wants to pay for spare capacity. So whenever there is a crisis you tend to have price spikes,” he says. “It is important that governments do not intervene every time there is a price spike, because then no one will build spare capacity.”
A more prosaic danger is the entry of several other large hedge funds and trading firms in physical commodity trading. The likes of Balyasny Asset Management and Jane Street have hired specialists to tap into the same vein that Citadel has mined in recent years, and more competition could mean diminishing returns.
Griffin shrugs off that threat, noting that physical trading is “fairly resource intensive” and that counterparties — the refineries, power plants and other end users of resources — put a premium on reliability and a long-term presence.
Then there is the fact that commodities is a volatile and ferociously competitive industry with long-established and well-connected merchant groups. “It’s a lumpy business, and unless you’re willing to actually buy assets it’s hard to get an edge,” says another major hedge fund manager who explored but decided against mimicking Citadel’s efforts in natural resources. “Not every hedge fund can survive only making real money three years out of 20.”
Yet the biggest pitfall could be what Citadel’s growing commodity arm means for the investment management business itself. Several industry executives question whether physical commodity trading and owning operating companies like Apex is appropriate for what is still — despite its evolving nature — a hedge fund.
“Once you begin acquiring assets then you’re more of a private equity fund than hedge fund,” observes one senior commodity industry executive. “You need locked-up capital. Citadel has locked up a lot of its investor money, but it’s still a difficult business to run out of a hedge fund. Unless they want to morph into something else.”
