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Hedge fund Citadel to move headquarters to Miami from Chicago

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© Reuters. FILE PHOTO: Miami’s cityscape and a port are reflected in the sunroof of a car in Miami, Florida, U.S., June 21, 2019. REUTERS/Carlo Allegri/File Photo

By Svea Herbst-Bayliss

BOSTON (Reuters) – Citadel, the $51 billion hedge fund founded by billionaire investor Ken Griffin, is moving its global headquarters to Miami from Chicago, becoming the latest investment firm to shift offices to Florida in the wake of the pandemic.

Griffin is the wealthiest resident in Illinois with an estimated net worth of $25 billion. The decision to relocate the hedge fund and Citadel Securities, the electronic trading firm, was motivated by Florida’s business-friendly climate and tax advantages, and concerns about rising crime rates in Chicago, people familiar with his thinking said.

“I am excited to have recently moved to Miami with my family and look forward to rapidly expanding Citadel in a city so rich in diversity and abounding with energy,” Griffin wrote to employees announcing the planned move in a note seen by Reuters. “Miami is a vibrant, growing metropolis that embodies the American Dream.”

The firm follows in the footsteps of prominent hedge fund managers Carl Icahn and Paul Singer whose firms moved to Florida from New York as employees longed for better weather and access to outdoor activities, a huge draw during the pandemic. Florida also does not collect state income tax.

Citadel is one of the world’s most successful hedge funds and has been headquartered in Chicago for more than three decades. The firm employs 1,000 people at it headquarters, 10% less than two years ago, a statistic that Citadel executives say underscores how tough it is to recruit top talent to Illinois. About 4,000 people work at the firm in 17 offices around the world.

Citadel executives have expressed concerns about crime in Chicago, noting a Citadel employee was stabbed a block from the office while walking to work, that someone tried to carjack Griffin’s vehicle, and that protests have occurred outside of the Chicago headquarters.

The firm’s move will deal another blow to Chicago’s business community after Boeing (NYSE:BA) recently said it would move its headquarters to Arlington, Virginia and Caterpillar (NYSE:CAT) announced plans to relocate to Irving, Texas. And it will likely put a dent in philanthropic giving after Griffin, who was born in Florida, donated more than $600 million to local educational, cultural, medical and civic organizations.

At the start of the pandemic, Citadel established a beachhead at the Four Seasons Palm Beach hotel to ensure fluid trading as COVID-19 locked down many businesses.

Stock Markets

FTX Said Exploring Potential Robinhood Acquisition, News Seen as ‘Positive’

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FTX Said Exploring Potential Robinhood (HOOD) Acquisition, News Seen as ‘Positive’

By Sam Boughedda

FTX, the crypto exchange founded by Sam Bankman-Fried, is said to be exploring the possibility of whether it could acquire Robinhood Markets Inc (NASDAQ:HOOD).

Bloomberg, citing people with knowledge of the matter, said FTX is speaking internally about how it could buy the app-based, primarily stock brokerage. However, they have made no takeover approach, and no final decision has been made.

Bloomberg said Bankman-Fried wrote in an emailed statement that they are “excited about Robinhood’s business prospects and potential ways we could partner with them,” but there are “no active M&A conversations with Robinhood.”

In May, a company Bankman-Fried controls, Emergent Fidelity Technologies revealed it had acquired a 7.6% stake in Robinhood.

During the pandemic, Robinhood thrived as retail investors and traders flooded its platform. However, it has struggled since, and its shares are down significantly since its debut in 2021.

Nevertheless, today’s report has resulted in a 17% jump in its stock price.

Mizuho analyst Dan Dolev sees the potential deal news as good news for Robinhood, but also said the company can make it on its own.

“We believe that a potential deal would be good news for HOOD as it helps expand its reach and breadth,” Dolev said. “We also believe that HOOD can survive, and thrive on its own.” He rates the shares a Buy with a $14 price target.

Earlier in the day, Goldman Sachs analyst Will Nance upgraded Robinhood from Sell to Neutral with a price target of $9.50. The analyst notes are now trading at an ~$6.5bn market cap versus its cash position of ~$6.2bn and tangible book value of ~$7bn. Further, the rising interest rates should significant acceleration net interest income over the next several quarters and help reduce Robinhood’s losses.

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Bankman-Fried’s FTX seeking path to buy Robinhood – Bloomberg News

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© Reuters. The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company’s IPO in New York City, U.S., July 29, 2021. REUTERS/Andrew Kelly

(Reuters) – Sam Bankman-Fried’s FTX crypto exchange is exploring whether it might be able to acquire Robinhood Markets Inc (NASDAQ:HOOD), Bloomberg News reported on Monday, citing people with knowledge of the matter.

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Refining Tightness to Persist, Even in a Recession – Piper Sandler

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© Reuters. Refining Tightness to Persist, Even in a Recession – Piper Sandler

By Sam Boughedda

Piper Sandler Senior analyst Ryan Todd said in a research note Monday that they believe refining tightness will persist, even through a recession.

With rising investor concerns of a recession and, to a lesser extent, fear of potential adverse policy impacts, U.S. refining stocks have pulled back by 25% since June 8th, said the analyst.

“PSC’s macro view suggests a high chance of recession in early 2023, and the historical ‘playbook’ would tell you to stay away from refiners in a recession, we see the dynamics as unique today, with margin strength driven by supply constraints, rather than demand strength,” wrote Todd. “Given system tightness, even in a severe recession (2.0 Mb/d+ of demand destruction), global utilization rates would merely approach pre-Covid ‘mid-cycle’ levels.”

As a result, the analyst reiterated HF Sinclair Corp (NYSE:DINO) as a top pick while lowering Valero Energy (NYSE:VLO) to a peer discount.

“As we have highlighted repeatedly over the last 6-9 months, global refining capacity is VERY tight, with 2022 utilization likely ~84%, well above the 5yr/10yr averages of 82%/81%,” added Todd. “Only in the case of 2.0 Mb/d of demand destruction would global refining utilization levels fall to ‘mid-cycle’ levels (81.9% vs. 82.3% 5-yr pre-Covid average). The reality is that we need some amount of demand destruction to prevent 2023 margins from surpassing 2022.”

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