Ex-Glencore, Goldman oil trader to launch new commodity fund

Fri Jul 26, 2013 2:04pm EDT

* Strategy is finding relative value in oil, gas

* A difficult time for commodity hedge funds

By Barani Krishnan

NEW YORK, July 26 (Reuters) - A former energy trader at Glencore Xstrata Plc and Goldman Sachs Group Inc is launching a commodities hedge fund focused on trading price spreads between different crude oil and petroleum products, people familiar with the matter said on Friday.

Jonathan Goldberg, who used to trade oil and natural gas for Glencore, and gasoline and other commodities for Goldman, is expected to start in August as chief investment officer at BBL Commodities in downtown New York, the people said.

He will be joined by Mark Strachan, a former Morgan Stanley executive, who will be operations and compliance head, and ex-Goldman and Julius Baer Gruppe AG employee Stephen Wieler, who will analyze energy markets at the new firm.

The fund's impending launch was first reported earlier this week in the online edition of Absolute Return, a trade publication for money managers. Goldberg did not immediately return an email from Reuters seeking comment.

Goldberg's strategy basically depends on finding relative value among the different energy markets he trades in, according to people briefed on the matter. In principle, the relative strategy seeks to exploit price discrepancies between different commodities, their delivery dates and locations.

Goldberg's focus will be on spreads in London-traded gasoil and Brent oil, and U.S. crude, gasoline and natural gas, the people said.

The trades will be primarily in futures, listed options and cleared swaps. Positions will focus on the "forward curve," where contract deliveries are 3 months to 24 months out and where Goldberg has had his longest track record.

Trades can last from a day to a month in the short term and one to six months over the long term, the people said.

They said minimum investment at the fund will be $1 million, and investors are allowed redeem their money with a 45-day notice. The firm will charge the industry standard fee of 2 percent on management and 20 percent on profit.

Goldberg's fund launch comes at a difficult time for commodity hedge funds, with data showing the majority of them losing money every month since January, the longest losing streak on record. The average commodity fund slid 3.58 percent in the first six months of the year, according to data from the closely watched Newedge commodity index.

Goldberg joined Glencore's U.S. operations in 2010 as a partner before the public listing of the merchant commodity trader in 2011 and its merger with Xstrata in May this year. He left earlier this year after leading Glencore's efforts to diversify from non-physical commodity trading, those who know of his record said.

Goldberg started his career with Goldman in 2003, working first with oil consumers and refiners on hedging strategies and risk management offered by the investment bank.

He went on to trade grains and base and precious metals, as well as oil and natural gas, while Goldman ran a huge proprietary trading business before the Dodd-Frank financial law that reshaped financial risk taking on Wall Street. While he managed risks across commodities, his niche was in gasoline and distillate products.

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