Hedge Fund Wiped Out on Commodity Selloff
September 3rd, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Pigs get slaughtered.
Via: Bloomberg:
Ospraie Management LLC, the investment firm run by Dwight Anderson, will close its biggest hedge fund after slumping 38.6 percent this year because of bad bets on commodity stocks.
The New York-based Ospraie Fund fell 26.7 percent in August after a “substantial sell-off” in energy, mining and resource equity investments, Anderson said in a letter to investors yesterday.
Losses at Ospraie, once the largest commodity hedge fund firm, underscore how the sudden swing in commodities caught even experienced managers off-guard. The Morgan Stanley Commodity Related Index of 20 mining, energy and agricultural companies declined 13 percent in July and August as the slowing global economy cut demand for raw materials.
“Commodities have been the story du jour, what with China’s 1.2 billion population industrializing,” said Peter Rup, chief investment officer at New York-based Orion Capital Management LLC, which invests in hedge funds. “It’s easy to find a trend and ride the train. The problem is, managers don’t know when to get off it.”
Glad I wasn’t the only one!