January 7, 2015 / 8:46 PM / 5 years ago

Exclusive: Ex-Goldman trader's fund up 51 pct playing energy's rise and fall

(Reuters) - A hedge fund run by former Goldman Sachs oil trader Jonathan Goldberg was among the biggest winners from violent energy market swings last year, piling on bullish bets during the fiercest winter in decades and then selling spot oil just before prices collapsed in the summer.

Goldberg’s New York-based BBL Commodities Value Fund, which he formed barely a year ago and manages $540 million, returned a net 51 percent to investors in 2014, according to a letter issued by the fund to its investors on Wednesday and seen by Reuters.

The average U.S. energy hedge fund eked out a gain of less than 1 percent last year.

BBL started 2014 with a “very bullish call” on U.S. distillates and natural gas that paid off during the polar vortex that hit during the last winter.

It later sold prompt oil, barrels for immediate delivery, and made other bearish bets as worries about a global oversupply and the refusal by top-exporter Saudi Arabia to cut crude output knocked benchmark prices from a September high of $103.30 a barrel to a December low of $55.81.

“It is probably one of the few energy funds that made money in both the bullish and bearish environments of last year,” said a BBL investor, speaking on condition of anonymity because the information was not public.

By summer, Goldberg’s fund had begun shorting time spreads in U.S. crude and U.K. North Sea Brent, the global benchmark for oil. This was basically a bet that prices of oil for immediate delivery will fall relative to longer-dated futures.

Crude prices began sliding in late June, starting a profit streak from September onward for BBL, performance data on the fund showed.

BBL also gained from a bet on weaker natural gas in December, when mild U.S. winter weather led to a 30- percent selloff on expectations that heating demand would ease.

“The fund developed a bearish view of energy even before prices began falling and stuck to it,” the investor said.

Brent and U.S. crude prices were halved by the end of 2014, finishing near levels last seen in the spring of 2009. They have fallen further in 2015. On Wednesday, Brent hovered at $51 a barrel, compared with June highs above $115. U.S. crude traded below $49, against its summer peak above $107.

While BBG’s basic relative value strategy for energy markets paid off handsomely, the average hedge fund with an energy bias returned 0.6 percent in 2014, according to data compiled by the Chicago-based Hedge Fund Research.

Only a handful of prominent hedge fund managers in oil and energy did well last year.

Ex-Vitol oil trader Pierre Andurand’s Andurand Capital in London, which manages $400 million, returned 38 percent.

Former Credit Suisse traders George Taylor and Trevor Woods posted a roughly 15 percent gain last year at their Connecticut-based Taylor Woods Capital Management, which manages about $1 billion, hedge fund industry sources said.

Crude oil’s freefall has shocked traders and baffled analysts who have all but given up trying to pinpoint the bottom of the market.

BBL said in its letter it also was “not confident making artificial calls on a market bottom.”

“After such a dramatic price decrease and decline in all petroleum time spreads, we are instead focusing our efforts on opportunities to sell the part of the oil curve we find most expensive and carefully own parts of the complex” that will perform better, the fund said.

BBL takes its name from the symbol for Blue Barrels, a historical reference for oil barrels coined in the days of legendary U.S. company Standard Oil.

Goldberg, a Yale economics graduate, launched the fund in September 2013, after a three-year stint as partner at commodities merchant Glencore and seven years with Goldman, where he focused on proprietary trading in oil products.

Reporting by Barani Krishnan; Editing by Jonathan Leff, Richard Chang and Alden Bentley

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