Hedge Funds and Commodities – Incompatible?

The news that the Carlyle commodities fund value has collapsed from around $2billion to $50million in cash under management made for interesting reading this weekend. The same article also mentions the general demise of hedge funds in commodities saying, “This week alone, commodity-trading firms Armajaro Asset Management LLP and Black River Asset Management LLC, a unit of agricultural conglomerate Cargill Inc., said they are closing funds. Several other firms that managed billions of dollars already have closed their doors, including London-based Clive Capital LLP and BlueGold Capital Management LLP. Large money managers including Brevan Howard Asset Management LLP and Fortress Investment Group LLC have wound down commodity strategies. Assets under management at commodity hedge funds have fallen 15%, to $24.1 billion, since their peak in 2012, and nearly 30 firms out of 250 have shut down since that year, according to industry consultant HFR Inc. Commodity firms lost money for three years in a row before 2014, HFR said.” This news, frankly, does not surprise me at all. Some of you may recall that back in 2006, I got quite engaged in the energy and broader commodity hedge fund scene along with colleague Peter Fusaro. We tracked activity and numbers … continue reading

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