By Jeanine Prezioso
NEW YORK Jan 11 Andrew Rowe, the founder and head of commodity hedge fund SandRidge Capital LP, is shutting down the fund after a year of positive returns, he said on Friday.
The fund, which traded mostly North American natural gas futures and derivatives, has $320 million under management and posted gains of 11 percent for its institutional clients last year, Rowe said by telephone from his base in Houston, Texas.
He said most investor money will be returned by the end of the first quarter. The fund has closed out its trading positions and has not taken any new positions in the last few weeks, Rowe said.
Banks and hedge funds alike have exited trading in the natural gas market in the last couple of years, citing a loss of profitability due to structurally low natural gas prices.
Technological advances in drilling have resulted in exponential supply growth, weighing on prices. In April 2012, New York Mercantile Exchange natural gas futures prices hit a 10-year low at $1.90 per million British thermal units (mmBtu).
Rowe would not say if other factors contributed to his decision to retire and close the fund.
"I'm going to sit back and hang out with my kids and play golf," said Rowe, who had been a trader at Citigroup's Smith Barney before starting SandRidge Capital in 2005.
The fund made money all but one year, Rowe said. In 2010, the fund reported a loss of 20 percent for the year, according to performance data from the company shared with Reuters by industry sources.
In 2008, the year of the Wall Street financial crisis, SandRidge was up n early 24 percent, as natural gas prices rose above $13 per mmBtu. Natural gas prices remained below $4 per mmBtu last year.
SANDRIDGE TO GOLDFINCH
Three of SandRidge's gas traders are set to join Houston-based Goldfinch Capital Advisors, LLC, run by former Centaurus Energy trader Michael Maggi, sources familiar with the matter said on Friday.
The three traders, Matthew Titus, Matthew Parker and Rick Thielke, will join Goldfinch in the near future and will trade natural gas, the sources said.
Maggi worked with billionaire gas trader John Arnold at Enron and then at Arnold's start-up Centaurus Energy, before leaving to start Goldfinch a few years ago.
Goldfinch has about $520 million under management and was up more than 9 percent through May 2012, according to industry sources. In 2011, the fund was up nearly 20 percent on the year.
Maggi declined to comment.
Rowe, for his part, says he is going to relax but may not be out of the hedge fund industry for good.
"I'm retiring for the time being. I'm going to relax and play some golf and in two or three months if I'm bored, I might get back in the game."