Magnetar Capital

Magnetar Capital LLC
Company typePrivate
IndustryHedge fund
Founded2005; 19 years ago (2005)
Founders
  • Alec Litowitz
  • Ross Laser
HeadquartersEvanston, Illinois[1]
Key people
ServicesInvestment management
AUMUS$18.434 billion (2024)[2]
Number of employees
260[1]
Websitewww.magnetar.com

Magnetar Capital LLC is a hedge fund based in Evanston, Illinois. The firm was founded in 2005 and invests in fixed-income, energy, quantitative, and event-driven strategies.[1] The firm was actively involved in the collateralized debt obligation (CDO) market during the 2006–2007 period. In some articles critical of Magnetar Capital, the firm's arbitrage strategy for CDOs is described as the "Magnetar trade".[3]

The company has additional offices in New York City, London, Houston, and Minneapolis.[4]

In 2006–2007, Magnetar Capital "facilitated the creation of a few of the worst-performing collateralized debt obligations", many named after stars or constellations.[5] While the CDOs Magnetar Capital helped create led to losses on Wall Street, the company profited as a result of its hedged investment strategy; Magnetar Capital had protected itself against losses on CDOs by purchasing credit default swaps.[5] As of 2010, 23 of the CDOs in which Magnetar Capital invested had become "nearly worthless".[6][7] Despite investigations by the U.S. Securities and Exchange Commission into several deals in which Magnetar Capital invested, no enforcement action was taken against the firm.[8]

  1. ^ a b c d Copeland, Rob (24 May 2017). "This Old School Hedge Fund is Going Quant". The Wall Street Journal. Retrieved 2 April 2018.
  2. ^ "Magnetar Capital".HedgeListsRetrieved 20 August 2024.
  3. ^ The Magnetar Trade: How One Hedge Fund Helped Keep the Bubble Going Archived 2010-04-10 at the Wayback Machine, by Jesse Eisinger and Jake Bernstein, ProPublica, April 9, 2010
  4. ^ Jahn Davis and Sean McMahon (14 July 2017). "Magnetar opens Houston office to expand footprint in energy trading". SmartBrief. Retrieved 7 May 2018.
  5. ^ a b Ng, Serena; Mollenkamp, Carrick (14 January 2008). "A Fund Behind Astronomical Losses". The Wall Street Journal. Retrieved 7 May 2018.
  6. ^ "The Inside Job. Act One: Eat My Shorts" (Episode 405), This American Life. (2010-04-09), Alex Blumberg, Jake Bernstein, Jesse Eisinger
  7. ^ The "nearly worthless" comment is at 36:40 into the This American Life "Inside Job" audio story
  8. ^ Eaglesham, Jean (13 December 2013). "Merrill Settles With SEC Over Crisis-Era Bond Deals". The Wall Street Journal. Retrieved 20 June 2018.