When we presented the first casualties emerging from last week's crude crash we predicted that in addition to Clive and Astenbeck, many more would soon crawl out of the woodwork. Sure enough, the WSJ discloses that London-based, $2.4 billion BlueGold commodities hedge fund is so far the winner in the loser category, dropping a whopping 20% so far in May, and once again confirming that in a market that only goes up, hedging is for wimps. This is the firm's worst downturn ever. But even the shellacking experienced has done nothing to dent the firm's conviction that fundamentals, once margin hikes and other "risk mitigation" features come and go, are as strong as ever. From the WSJ: "Despite the upheaval, the firm, led by Pierre Andurand, is exiting few positions, according to someone close to the matter. He remains bullish on oil prices, predicting that oil could hit a record $180 a barrel over the next few years, according to this person." This is all fine, but we keep banging our heads over this simple question: Just how will Joe Lavorgna be able to spin $180 oil as bullish for the economy?
Not surprisingly, in the fast paced world of levered momentum chasing, once known as hedgefunding, the first shall be last:
Andurand's bullish stance has served his investors well and made his firm among the hottest in the business. BlueGold soared 210% in 2008, 55% in 2009 and nearly 13% last year, after fees, according to an investor in the firm. Through April of this year, the firm was up nearly 17%, before fees charged to investors. The firm has rebounded from past sharp downturns, such as a 19% plunge in late 2008, according to an investor
The fund is just as upbeat this time around about the energy market. Andurand recently told an investor that this month's downturn was an aberration caused by nervous investors, some of whom piled into the market recently. Over the next few years, he argued, demand for oil will keep rising, as China grows and other emerging-market nations expand, while energy supply will remain under pressure.
The upshot: BlueGold remains long crude oil, according to someone familiar with the firm's trading. It's more lukewarm about natural gas, which has more supply coming to the market
We are still looking for an update on some other energy-heavy funds heading out of the recent crash, most notably various Tiger cubs and a couple of rather big Texas-based "hedge" funds. Incidentally, what is once superstar Ospraie up to these days?