Citadel’s Relentless Pursuit of Alpha

KEN GRIFFIN "Griffin obsessively monitored his competitors’ moves. Yeh recalled to me that, at one point, Griffin theatrically presented him with a piece of paper bearing a number: the profit David Shaw’s firm had made through a new technique called statistical arbitrage, or stat arb. It was a bonanza. “What the hell is stat arb?” Yeh asked. “I’m not really sure,” Griffin admitted. But, he continued, it involved “numbers and formulas and computers,” all of which were part of Yeh’s physics background. Griffin told Yeh to choose one other colleague for a new team that would learn by doing. Citadel started trading stat arb about six months later. “I do enjoy understanding what systems we need to build,” Griffin told me. “I am willing to get my hands dirty with all kinds of details that in some sense would often be viewed as not belonging on the radar of a C.E.O.” At one point, Griffin moved his office away from the trading desk, but he kept going back over to look at traders’ screens. An early employee told me, “We used to joke—is the dragon in the cave, or is he out?” Citadel has never publicly codified how it achieves “alpha”—outperforming the market. But my conversations with Griffin and twenty-eight of his current and former employees revealed that they had consistent tenets. The output of Citadel’s factory is alpha. Every aspect of the factory must be constantly improved, and to accomplish this everyone must forage for information. The purpose of every improvement is to minimize unknown risk so that Citadel can maximize intentional risk. The biggest risk of all is complacency. The objective is not just profit but victory over rivals." The New Yorker - June 15, 2026