Top funds dealt double-digit losses by commods crash

NEW YORK Mon May 9, 2011 7:14pm EDT

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NEW YORK (Reuters) - Several commodity hedge fund titans suffered double-digit losses last week as oil fell by a near-record $16, money managers who invest in the funds told Reuters on Monday.

While some of the losses will likely be recovered after Monday's price rebound of nearly $7 a barrel, last week's fund results underscore how oil's sharp fall caught some top traders off guard.

Astenbeck II, the flagship $2.6 billion commodity fund run by Phibro's head trader Andrew Hall, ended last week down 12 percent, one of the fund's investors said on Monday, requesting anonymity.

London-based BlueGold, whose head trader Pierre Andurand, like Hall, has made a name for himself taking long directional bets on oil prices, suffered double-digit losses in the $2.1 billion fund, two investors said. The $5 billion fund Clive Capital lost $400 million, the Financial Times reported.

And a little-known Dutch hedge fund called Transtrend was said to be among the biggest losers, suffering losses on its $6 billion commodity-oriented fund, one investor said. An official at the fund said it had been "a very bad week," but did not offer specific figures.

Bleeding hundreds of millions in a week is painful for even large funds, but there was no evidence that any had been wiped out by the slide, according to interviews with over a dozen fund industry sources. And in the past, high volatility has contributed to the funds' biggest paydays.

BlueGold famously gained around 200 percent in 2008 by accurately calling oil's rise to a record $147 a barrel, and anticipating its subsequent plunge to $35 five months later.

Speaking about Astenbeck and BlueGold, one investor in hedge funds said: "This is not something too serious for either of them. Both can take fairly directional position in crude oil specifically so it isn't uncommon to see these numbers in a month like May so far. Chances are they'll rebound pretty quickly."

Astenbeck and BlueGold both declined comment.

Brent crude last Thursday posted its largest intraday drop in history, at one point falling nearly $13 a barrel. But on Monday oil rebounded sharply, with Brent rising $6.77 to settle at $115.90 a barrel, its second-largest single-day gain.

The hedge funds also invest in other raw goods that plunged last week. The Reuters-Jefferies CRB index .CRB, which tracks 19 major commodities, slid 9 percent. Silver dropped by the most in three decades.

Many of the affected funds have been amassing large profits for months as oil rose. Even after last Thursday's fall, Brent was up 38 percent from year-ago levels.

But some went into last week with a false conviction that oil prices would stay aloft, buoyed by unrest in the Middle East and rising global demand, investors said.

Since early April, investment firms including Goldman Sachs had been warning clients to pull back from commodities markets in the short term, calling for a sharp near-term correction.

Goldman still expects prices to rise again by 2012, surpassing levels seen before last week's rout.

ASTENBECK'S LOSSES

Astenbeck II's losses, estimated at more than $300 million, erased year-to-date gains. Its chief trader, Connecticut-based Hall, is famous in the fund world for earning bonuses of $100 million a year. He managed a total of around $4.5 billion across several funds in late April, sources said.

When he's not trading, Hall is known to enjoy collecting expensive neoimpressionist art, and some works deck the walls of a German castle he owns.

In a private letter to investors dated May 2, he had sounded a defiantly bullish note on oil:

"Some pundits have postulated that the rise in oil prices is sowing the seeds of its own demise. We think not."

Astenbeck remained bullish on oil in part due to rapidly expanding world demand and a dearth of spare production capacity to meet it, the letter said.

"Higher oil prices are not an aberration but part of a -- to use a cliche -- new normal," he wrote.

New York-based private equities giant The Blackstone Group (BX.N) is among Hall's largest investors, and recently had more than $1 billion under Hall's management, the sources said. A Blackstone spokeswoman declined comment.

Astenbeck's flagship fund had returns of 12 percent last year, two investors said. Hall recovered impressively after one month of heavy losses, last May, when Astenbeck shed 10 percent, they added.

(Additional reporting by David Sheppard in London, Svea Herbst in Boston and Emma Farge in New York; Editing by Dale Hudson and Lisa Shumaker)

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