Commodity sell-off hits star hedgies' track records

Reuters

By Laurence Fletcher and Tommy Wilkes

LONDON (Reuters) - A sharp sell-off in commodity markets in the past few weeks is wreaking havoc with the track records of some of the biggest-name funds in the sector, many of which now languish near the bottom of the $2 trillion industry's performance tables.

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Funds like Mike Coleman's Merchant Commodity fund and Willem Kooyker's Blenheim Capital sit on hefty double-digit losses for the year after investors worried about global economic growth recently dumped gold, copper and cocoa for less risky assets.

The Reuters-Jefferies CRB index of 19 commodities <.CRB> shed 13 percent during September, a drop which has echoes of May when many star managers betting on rising prices were caught on the hop by a quick sell-off.

The size of the September hit, on top of losses suffered earlier this year, means many managers who enjoyed bumper profits from the long commodity bull run now face the likelihood of a down year.

The average hedge fund investing in the Energy and Basic Materials sectors has slid 15.5 percent this year to end-September, making it the worst-performing strategy as measured by Hedge Fund Research's HFRI index.

Brent crude lost around 7 percent last quarter, while London copper lost more than a fifth to end last month near 14-month lows.

Even gold, which had gained about a third this year and provided one of the most profitable trades for many managers, subsequently slumped more than 10 percent in September.

TRACK RECORDS TARNISHED

The losses from commodities also come in a year that is tarnishing some star managers' records across the industry.

John Paulson, seen by some as making the greatest ever trade when he bet against subprime debt in 2007, is down 47 percent in his Advantage Plus fund.

The $1.1 billion Merchant Commodity Fund, a fundamentally-driven commodity long-short fund run out of Singapore, lost 5.4 percent last month, said a source who saw the performance data.

This leaves the fund -- which was profitable in each of the past seven years and which racked up annual gains of more than 30 percent in 2005, 2006 and 2007 -- down 36 percent this year, manager Mike Coleman told Reuters, although he declined to comment on reasons for the losses.

BlueGold Global Fund, run by the firm's chief investment officer Pierre Andurand, is down 0.4 percent last month to September 16, according to figures seen by Reuters, leaving it 25 percent in the red for the year.

And Willem Kooyker's Blenheim Capital Management, a New Jersey based fund estimated in May to manage $5 billion, and a big commodities investor, lost 15.5 percent in September and is down 25 percent in 2011, a person familiar with the fund said.

Meanwhile, commodities giant Armajaro, co-founded by coffee and cocoa trader Anthony Ward, saw its flagship Commodities fund fall more than 5 percent last month to September 23, taking year-to-date losses to more than 7 percent, according to figures seen by Reuters.

The firm's Emerging Markets fund, a macro fund betting on equities, derivatives and fixed income, has also suffered in 2011's sell-off, losing 14.4 percent this year.

A spokesman for the firm, which manages $2.2 billion in assets, declined to give reasons for the performance

Star commodities trader Paul Touradji's $840 million Global Resources Offshore fund was down 17.5 percent this year to end-August, according to figures seen by Reuters. Last month Touradji said he would return to full-time trading to try and save his fund from its first-ever annual loss.

A spokesman for Touradji declined to comment.

Not all funds were stung by September's sell-off -- some were able to profit from falling prices.

Clive Capital, the $4 billion London-based hedge fund firm set up by Chris Levett, jumped 11.5 percent in September after taking a bearish position on commodities, two people who have seen the numbers said.

This leaves the fund down 1.4 percent in 2011. Clive Capital declined to comment.

(Additional reporting by Katya Wachtel in New York, and Nishant Kumar in Hong Kong; Editing by Helen Massy-Beresford)