* Clive Capital up 5 percent for this year; Merchant up 12
* Revival comes after 2 dismal years
By Barani Krishnan
NEW YORK, April 30 Clive Capital and Merchant
Commodity Fund, two commodity hedge funds that lost money over
the last two years, are on an upswing after their bearish bets
on prices benefited from this month's market tumble.
London-based Clive, which manages about $1.4 billion
invested largely in energy and metals markets, was up by an
estimated 5.2 percent year to date on April 19, performance data
obtained by Reuters showed.
Dismayed investors pulled out of Clive last year, when the
fund run by former Moore Capital trader Chris Levett lost nearly
10 percent for the second year in a row. Its capital dropped by
nearly half in 2012.
Merchant gained an estimated 12 percent for 2013 through
April 19, the data showed. The broad-based commodities fund was
founded in Singapore by former Cargill trader Mike Coleman and
is now run out of London by his partner, Doug King.
Merchant once managed more than $2.5 billion, but now has
slightly more than $200 million as many investors redeemed after
it lost about 30 percent in 2012 and 8 percent in 2011.
The turnaround at Clive and Merchant comes after commodity
markets plunged in mid-April due to investors' worries about
stagnating China growth, euro zone debt trouble and uncertainty
about further U.S. economic stimulus.
The two outperformed at least half a dozen London-based
commodity hedge funds - including Brevan Howard Commodities
Strategies, Krom River and Higgs Capital - that got caught on
the wrong side of a market hit by volatility.
Brent crude oil fell below $100 a barrel for the
first time in nine months after the mid-April selloff. Gold
suffered its biggest loss in dollar terms, and copper
sank to an 18-month low.
"It pays to be bearish on commodities during the worst of
market collapses, and Clive and Merchant seem to have taken the
most opportunity of a market that swung their way," said a hedge
fund industry source who is familiar with the two funds.
April's roller coaster ride in gold, which took bullion
prices down $225 over two days before the market made back half
of the decline the next 10 days, has also stung
noncommodities-focused hedge fund managers who invest in gold
more as a financial asset.
Billionaire John Paulson's best-known fund, the Paulson & Co
Advantage, was down 2.4 percent for the month through mid-April,
largely because of bullish bets on gold.
Data from the U.S. Commodity Futures Trading Commission for
the week ended on April 16 showed hedge funds were betting on
price gains in gold even as the market posted a record loss in
dollar terms over two sessions that week.
For this month alone, Clive gained nearly 8 percent through
April 19, the data obtained by Reuters showed. The fund
benefited from short positions, or bets on price declines, in
gold, metals and oil, industry sources said.
Clive declined to comment.
Merchant rose nearly 7 percent in the first 19 days of
April. Sources familiar with the firm said Merchant profited by
shorting petroleum and betting on the direction and relative
value in industrial commodities such as rubber, coal, iron ore
and cotton. Relative value is a strategy that seeks to exploit
price discrepancies between different commodities, their
delivery dates and locations.
Merchant Managing Director Coleman declined to comment.
Brevan Howard Commodities, which manages about $900 million,
was down 2.3 percent year to date as of April 19. The fund, run
by Stephane Nicolas, is part of billionaire Alan Howard's $39
billion Brevan Howard Asset Management, Europe's second-largest
hedge fund group. A spokesman for the group declined to comment
on the fund's April performance.
Krom River, which oversees about $600 million in assets and
is managed by Christopher Brodie, was down 1.9 percent year to
date as of April 19. Officials were not available for comment.
Higgs Capital, which has about $350 million under management
and is run by Jean Bourlot and Neal Shear, confirmed data
obtained by Reuters showing a more than 2 percent drop in the
The $1 billion Armajaro Commodities Fund, managed by John
Tilney, was among the few gainers for April, rising 0.6 percent
for the month and about 4 percent for the year through April 19.
It did not respond to a Reuters email seeking comment.
The average commodity fund was down 0.8 percent for the
first three months of 2013, according to a Newedge index that
monitors commodity trading funds. April estimates are not