Oil hedge fund losses
His hedge fund isn't faring as well amid the coronavirus pandemic and its economic fallout. Lumsden's office focuses on securitized credit positions, according to Bloomberg, one of the markets slammed hardest by the virus. Widespread lockdowns to stem the outbreak's contagion wiped out several companies' revenue streams, escalating the risk of late payments and defaults. While central banks and governments have been quick to issue emergency relief, regulatory hurdles and glitches have kept several firms from tapping the credit facility. Read more: An expert at Boyar Research lays out the Warren Buffett-inspired investing approach that's helped the firm crush the market for 7 years - and offers 4 stock picks for a coronavirus-battered market. The March tumble marks a sharp reversal from Lumsden's last recession-era performance.
Hedge Funds That Cashed In When Oil Prices Cratered
As smaller investors pile into the risky and troubled United States Oil Fund, hedge funds are taking the other side of that trade and making a lot of money. According to data from S3 Partners, from Feb. As crude oil began its historic tumble that sent prices plummeting below zero and into negative territory , bets against the USO accelerated. Over the last week, short positioning in the fund rose by But this has never been the mandate for the fund, which until this week tracked the front-month, or nearest, West Texas Intermediate futures contract.
USO was the most-bought name Tuesday on Robinhood , a free stock-trading app that has attracted roughly 10 million, mostly millennial, users. By Wednesday, it was among the top 30 most-held names on Robinhood, according to the start-up. Short selling is a practice used by sophisticated investors like hedge funds. It involves selling borrowed shares and then buying them back at a lower price for a profit. Hayman Capital Management CIO Kyle Bass has been warning investors about the danger of exchange traded funds that track oil prices and said he was short some of these funds.
One such change is that the fund will now hold a mixture of contracts, rather than focusing on the near-month one. USCF also executed an 8-for-1 reverse stock split in an effort to boost the stock price and stay attractive to retail investors. A reverse stock split reduces the number of shares outstanding, thereby raising the price of the stock.
This is a cosmetic change and the net effect to the return for existing shareholders will be nothing. While it's likely that USO had already rolled out of the WTI contract for May delivery before it plunged into negative territory on Monday, the drop illustrated the dangers of concentrated exposure.
When asked why the fund keeps changing its structure, USCF chief marketing officer Katie Rooney told CNBC the following: "Due to extraordinary market conditions in the crude oil markets, including super contango, USO has invested in other permitted investments, as described in the prospectus. Sign up for free newsletters and get more CNBC delivered to your inbox. Get this delivered to your inbox, and more info about our products and services.
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Pierre Andurand, one of the oil market's last remaining hedge fund managers, posted his second consecutive annual loss with a % decline. Losses at Pierre Andurand's hedge fund deepened in January as fears of the coronavirus hurting global economic growth roiled commodity.
LONDON Reuters - Hedge fund managers sensed oil prices were nearing a turning point last week, and for the first time in more than two months started to add long positions in anticipation prices would bounce from an unsustainable low. Overall, hedge funds and other money managers were still net sellers of 19 million barrels of petroleum in the six most important futures and options contracts in the week ending on March But they initiated 40 million barrels of new purchases as well as 59 million barrels of fresh sales, according to position records published by ICE Futures Europe and the U.
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In the markets, hedging is a way to get portfolio protection—and protection is often just as important as portfolio appreciation. Hedging, however, is often discussed broadly more often than it is explained, making it seem as though it belongs only to the most esoteric financial realms.
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As smaller investors pile into the risky and troubled United States Oil Fund, hedge funds are taking the other side of that trade and making a lot of money. According to data from S3 Partners, from Feb. As crude oil began its historic tumble that sent prices plummeting below zero and into negative territory , bets against the USO accelerated. Over the last week, short positioning in the fund rose by But this has never been the mandate for the fund, which until this week tracked the front-month, or nearest, West Texas Intermediate futures contract.
Andurand’s Hedge Fund Lost Big In Volatile Oil Markets
Back in Forbes Magazine placed Pierre Andurand in its list of the top 20 highest-earning hedge-fund managers. In June of , just before oil crashed, BlueGold's returns were described by the New York Post as "eye-popping" and "monstrous". So choppy, in fact, that after two years of losses, Andurand suffered another dramatic loss in January, when oil prices once again tumbled, this time on fears the coronavirus was hurting global economic growth, which in turn hit demand for oil and roiled global commodity markets. Last month's loss followed two prior painful years for Andurand who was down 7. So is another name for " brilliant hedge fund investor " just "that guy who uses a ton of leverage to boost his beta" and picked the right side of the coin toss? What about picking the wrong side for three years in a row? If so, one wonders if an even better description for someone like Andurand is just "lucky", something has has not been for the past three years when he desperately hoped that oil prices would skyrocket higher even as China's economic slowdown meant that oil demand would suffer so much even OPEC now agrees. As Bloomberg notes, oil had its worst start to a year since on concern the spread of the coronavirus will curb demand in China for energy.
This has been against a challenging backdrop for many peers in the space, some of which have shut down.
Maounis and headquartered in Greenwich, Connecticut. The company was founded in by Nicholas M. Maounis and based in Greenwich, Connecticut. Throughout much of its history, convertible arbitrage was the firm's primary profit vehicle.
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Both funds were very bullish heading into July, market sources said, leaving them caught on the wrong side during the oil price slide. However, physical markets are showing signs of strain as crude builds on ships and weighs on prices for spot cargoes. It is mainly due to China destocking. Their low imports are not sustainable. They have been very low for 3 months. BBL executives were not immediately available to comment. Overall, commodity-focused macro hedge funds are down 1 percent on average in the first seven months of , according to data from industry tracker Hedge Fund Research. Trading desks of oil major BP BP. Energy hedge fund Velite Capital, once among the most profitable natural gas trading shops in the United States, is winding down operations, Reuters reported on Thursday. Sierentz Global Merchants, a commodities trading firm controlled by members of the Louis-Dreyfus family, recently exited its physical energy business, and Texas tycoon T. Discover Thomson Reuters. Directory of sites. Business News. Devika Krishna Kumar , Maiya Keidan.
