Two months ago, when the first tremors in the crude market appeared, we wondered, jokingly, if one of the biggest crude bulls -the man known as the "god of oil trading - Phibro's (and formerly Citi's uber-well paid [7] trader) Andy Hall was puking blood yet.
Any crude BWICs from Andy Hall yet?
— zerohedge (@zerohedge) October 2, 2014 [8]
But while we may have been joking, for Andy Hall things were only all too real. So real, in fact, he just lost his job according to Bloomberg.
- OIL TRADER ANDREW HALL SAID TO LEAVE PHIBRO BY YR-END: SOURCES
So is Hall's unwind the source of what some say is a relentless, rolling liquidation within the commodity space?
What is surprising, is that until September, Hall's Astenbeck wasn't doing too badly as the following letter shows:
What is perhaps more ironic, is that Hall actually thought shale would be a dud, and that we are beyond the peak-shale era, which would send crude prices higher. Well, he may have been correct about the fate of shale oil, but not how it would get there, considering he himself would be one of the casualties in the process.
More ironic, the following blurb from Bloomberg [7]: "Andrew John Hall -- known as the God of Crude Oil Trading to some of his peers -- has built his success on a simple creed: Everyone who disagrees with him is wrong.
For most of the past 30 years, that has been a killer strategy. Like a poker player on an endless hot streak, Hall has made billions for the companies for which he’s traded by placing one aggressive bet after another. He was one of the few traders who anticipated both the run-up in and the eventual crash of oil prices in 2008.
Hall was so good that he bagged a $98 million payday in 2008, when he ran Citigroup Inc.’s Phibro LLC trading unit, and was up for about $100 million more in 2009.
In the end, Bloomberg Markets will report in its October 2014 issue, he couldn’t collect the 2009 payout from Citi because an anti–Wall Street backlash against the bank -- which had just received a $45 billion U.S. government bailout -- led regulators to block it. No such bonuses have awaited Hall of late. He’s racked up losses in two of the past three years.
His wager that oil prices would rise and rise has run headlong into an unanticipated energy revolution -- the frenetic push in the U.S. and elsewhere to wring crude out of shale. Shale drilling has boosted U.S. oil output to the highest level in 27 years; it helped the U.S. supply 84 percent of its energy demand last year. Oil prices, far from taking the upward trajectory Hall predicted, have been essentially unchanged since 2011.
For the 63-year-old Hall, who has used his wealth to build an extensive modern art collection, this has meant a sobering comedown. Assets under management at his Astenbeck Capital Management LLC hedge-fund firm fell to $3.4 billion in May, down from as much as $4.8 billion in January 2013. Astenbeck, based in Westport, Connecticut, fell 3.8 percent in 2011, posted a 3.4 percent gain in 2012 and slid another 8.3 percent in 2013, according to Astenbeck letters obtained by Bloomberg. This makes some wonder whether Hall has lost his touch.
“At one point, Phibro traders were the rulers of the world,” says Carl Larry, a former trader who publishes a newsletter on oil markets. “The best always learn how to adapt. Maybe it’s taking him longer to do that now. Or maybe his time has come.”
The punchline: "Hall, based on comments in his letters to investors, is unfazed by the losses and secure in his view that the price of oil is destined to rise. In those letters, he regularly mocks those who are convinced that a shale boom will mean long-term cheap, abundant energy."
Oops.
As for the $64K question: has he liquidated his long positions yet, or is he yet to liquidate them? Considering the bankruptcy fate of Venezuela may well lie in the answer, we are confident we are not the only ones curious.
