Commodity sell-off hits star hedgies’ track records
* Merchant Commodity down 36 pct this year* Blenheim Capital down 25 pct* Clive Capital up 11.5 pct in Sept after bearish betBy Laurence Fletcher and Tommy WilkesLONDON, Oct 13 (Reuters) - A sharp sell-off in commodity
markets in the past few weeks is wreaking havoc with the track
records of some of the biggest-name funds in the sector, many of
which now languish near the bottom of the $2 trillion industry’s
performance tables.Funds like Mike Coleman’s Merchant Commodity fund and Willem
Kooyker’s Blenheim Capital sit on hefty double-digit losses for
the year after investors worried about global economic growth
recently dumped gold, copper and cocoa for less risky assets.The Reuters-Jefferies CRB index of 19 commodities
shed 13 percent during September, a drop which has echoes of May
when many star managers betting on rising prices were caught on
the hop by a quick sell-off.The size of the September hit, on top of losses suffered
earlier this year, means many managers who enjoyed bumper
profits from the long commodity bull run now face the likelihood
of a down year.The average hedge fund investing in the Energy and Basic
Materials sectors has slid 15.5 percent this year to
end-September, making it the worst-performing strategy as
measured by Hedge Fund Research’s HFRI index.”Some commodity hedge funds have struggled due to their
markets trading more in line with risk appetite than
supply-demand characteristics — with concerns over the
sovereign debt crisis overshadowing fundamentals — and lacking
clear direction,” said Credo Capital’s head of research Gemma
Godfrey.”Oil, for example, has seen more than 10 percent swings in a
week, whilst trending sideward. This also spooked some managers
to cut positions ahead of strong rallies.”Brent crude lost around 7 percent last quarter, while London
copper lost more than a fifth to end last month near 14-month
lows.Even gold, which had gained about a third this year and
provided one of the most profitable trades for many managers,
subsequently slumped more than 10 percent in September.TRACK RECORDS TARNISHEDThe losses from commodities also come in a year that is
tarnishing some star managers’ records across the industry.John Paulson, seen by some as making the greatest ever trade
when he bet against subprime debt in 2007, is down 47 percent in
his Advantage Plus fund.The $1.1 billion Merchant Commodity Fund, a
fundamentally-driven commodity long-short fund run out of
Singapore, lost 5.4 percent last month, said a source who saw
the performance data.This leaves the fund — which was profitable in each of the
past seven years and which racked up annual gains of more than
30 percent in 2005, 2006 and 2007 — down 36 percent this year,
manager Mike Coleman told Reuters, although he declined to
comment on reasons for the losses.BlueGold Global Fund, run by the firm’s chief investment
officer Pierre Andurand, is down 0.4 percent last month to Sept.
16, according to figures seen by Reuters, leaving it 25 percent
in the red for the year.And Willem Kooyker’s Blenheim Capital Management, a New
Jersey based fund estimated in May to manage $5 billion, and a
big commodities investor, lost 15.5 percent in September and is
down 25 percent in 2011, a person familiar with the fund said.Meanwhile, commodities giant Armajaro, co-founded by coffee
and cocoa trader Anthony Ward, saw its flagship Commodities fund
fall more than 5 percent last month to September 23, taking
year-to-date losses to more than 7 percent, according to figures
seen by Reuters.The firm’s Emerging Markets fund, a macro fund betting on
equities, derivatives and fixed income, has also suffered in
2011’s sell-off, losing 14.4 percent this year.A spokesman for the firm, which manages $2.2 billion in
assets, declined to give reasons for the performanceStar commodities trader Paul Touradji’s $840 million Global
Resources Offshore fund was down 17.5 percent this year to
end-August, according to figures seen by Reuters. Last month
Touradji said he would return to full-time trading to try and
save his fund from its first-ever annual loss.A spokesman for Touradji declined to comment.Not all funds were stung by September’s sell-off — some
were able to profit from falling prices.Clive Capital, the $4 billion London-based hedge fund firm
set up by Chris Levett, jumped 11.5 percent in September after
taking a bearish position on commodities, two people who have
seen the numbers said.This leaves the fund down 1.4 percent in 2011. Clive Capital
declined to comment.
