"Oil God" Andy Hall Blows Up, Closes Main Astenbeck Hedge Fund

Back in December 2014, the start of the worst oil rout since the financial crisis claimed its first victim when 113 year old Phibro, then owned by Occidental Petroleum after its sale by Citigroup, would liquidate in the US after it failed to buy a buyer. Phibro, of course, was made famous or perhaps infamous (after his $100 million Citi bonus in 2008 prompted a Congressional inquiry) by its star employee, "oil god" Andy Hall. Yet while said god's employer Phibro, was liquidating and thus ending one of Hall's paychecks, Hall would continue managing his $3 billion hedge fund Astenbeck (of which Occidental owns 20%) where he worked in parallel.

At the time we wondered how long this oil permabull - who suffered tremendous losses in the ensuing two years - would last in an environment where oil prices refused to go up, and whether he "would blow up twice on the same trade." Turns out the answers, in reverse order, were "yes" and "about 2 and a half years", because moments ago Bloomberg reported that Hall is shuttering his main Astenbeck hedge fund:

  • OIL TRADER ANDY HALL IS SAID TO CLOSE MAIN ASTENBECK HEDGE FUND
  • ASTENBECK MASTER COMMODITIES FUND II IS SAID TO LOSE 30% IN 1H

As Bloomberg adds Hall is closing down his main hedge fund "after large losses in the first half of the year" which amounted to almost 30% through June for his flagship Astenbeck Commodities Fund II.

Hall's liquidation comes less than three months after another famous oil bull, Pierre Andurand, liquidated his last remaining long positions, although it was unclear if he had also shuttered his hedge fund.

Ironically, it was less than a month ago that Andy Hall finally capitulated, admitting that the "facts changed", and warning that oil may not go up much from current prices in what was his bearish letter ever (full letter can be found here). This is what Hall concluded in his latest letter to investors:

Whereas it once seemed positions could be held with an eye to a longer-term secular appreciation, that is no longer the case. Indeed, the evidence is now in plain sight. Over the past year, the front month WTI futures contract has moved by double digits in percentage terms 10 times within a $40 - $55 band. This volatility has been accentuated by large financial flows into and out of the market by non-traditional investors and algorithmic trading systems. Attempting to capture just a percentage of those moves makes more sense than trying to ride what has turned out to be a non-existent trend, especially when contango inflicts a negative roll return on investors. The extreme volatility within a rangebound environment also argues for a more tactical and conservative approach to portfolio management.

Upon reading this, and seeing little further upside from their former "oil god", it appears that Hall's LPs decided they had had enough, and pulled their cash.

Oil, sending imminent liquidation, is down on the news.

Comments

Omen IV cheka Thu, 08/03/2017 - 15:24 Permalink

NOT a Dupe - he says "Facts Changed" - Facts always change its the nature of time and reflexivity as information is processed - the Fact that he couldnt anticipate what the new fact would be as a trend or lack of a trend means he was always "lucky" when he had the "inside" information and now he doesnt - since if he couldnt do it now he couldnt do it a long time agosame is coming for the stock market - these guys have no knowledge of when the facts change unless Hank Paulson has 5 of them - all former GS in a room and posing hypotheticals with conviction - then they are all geniuses. same with shorting mortgage CDS when you know the stuffie in London at AIG has reached max and cant eat anymore.

In reply to by cheka

order66 Thu, 08/03/2017 - 11:21 Permalink

Idiots like this would be raking it in if they just tuned out the macro/OPEC/supply side noise and traded price action on a weekly chart.

adr Thu, 08/03/2017 - 11:26 Permalink

Oil has moved double digits in percentage terms 10 times within a $40-55 band says it all.There is no point in allowing this blatant manipulation to continue. What has happened is that these whipsaws in WTI have caused RBOB to climb to a near $1 premium to a barrel of oil as price moves to the downside lag WTI, but moves to the upside rise in tandem. Algos have sent RBOB to $85 WTI levels.Anyone else remember paying $1.75 for gas when oil was $75? I do and still have the receipts.

Doom Porn Star mily Thu, 08/03/2017 - 11:45 Permalink

Andy Hall, permabull.BULL alright.  BULLSHIT.He was long for many years when inflation and speculative leverages pushed oil ever higher.The guy was actually nothing special at all.  He knew nothing out of the ordinary.    He had NO strategy but to ride an incoming tide and suck off the foam.Dumb luck.  Right place at the right time.  He skimmed hundred$ of million$ out of the real economy just sitting there hitting the 'buy' button all day.What a fucking joke.

In reply to by mily

Honest Sam Thu, 08/03/2017 - 11:28 Permalink

Yeah, well, I covered my 6 month short position of TEVA on Tuesday.  Today it dropped another $6.00, down to $25.00, due to an  immediate 75% cut in the dividend. No one is perfect. 

venturen Thu, 08/03/2017 - 11:33 Permalink

Those who live by the sword die by the sword.  He seems to have forgotten in the end true economics punishes fraud and manipulation. Waiting for the Fed to receive a whooping.  The invisible hand Bitch Slapped Him

MoreFreedom Thu, 08/03/2017 - 11:33 Permalink

Politics and technology burst the oil bubble.  It's hard to invest when politicians have such an impact on a market, without inside information politicians have.  And technology is another wild card.   it's not a market for the faint of heart nor those with meager assets.

order66 Thu, 08/03/2017 - 11:36 Permalink

"The extreme volatility within a rangebound environment also argues for a more tactical and conservative approach to portfolio management."Yeah, it's called trading. Wake up and think like a machine or get left in the road. Period.

Soul Glow Thu, 08/03/2017 - 11:41 Permalink

I hope I have some money for silver this month.  Had to replace spark plugs and brakes in my car.  For awhile I was opining that I hadn't bought bitcoin like Leni and Maulas had told me to when it was back at $30.  I could have only grabbed a few hundred but....and that's why I don't put bitcoin on blast, at least I haven't since the spike.  Who knows what any asset will do.Look at Tesla.  Yes their company is a shitshow but the shorts ahven't realised how far a mania will go.  We often relate manias to "tulip bulbs" here at ZH, and for good reason.  Imagine going back to Holland in a time machine and seeing tulip bulbs trading for thousands of dollars.  Jeesh!  So back in 2009 I thought electric cars would be a good investment as I also thought oil was going to becaome as rare as anything.  See I was in the midst of studing "peak oil" and thought that the world would need electric cars, even if the technology wasn't there to support our infrastrucure, we would need alternatives.  But as things dragged on I couldn't see the forest through the trees.  Finance looked like a whirlwind and I lost track of trading into the mania.  I hunkered down with silver coins and didn't look elswhere.  Not to stocks and not to bitcoin.Although I have stayed long silver and gold, I really haven't been able to call much else for the last two years.  I didn't buy bitcoin, I hedged equitywith some shorts, and I kept stacking.  But I think the one thing I learned was the most important lesson I could have learned, that nobody knows what the future holds and sometimes the most adiment person is the one who will fall off their horse hardest.So with that I will keep stacking humbly.  Very humbly, yet still believing silver is the ultimate asset due to its history and its rarity.  But good luck out there to everyone else.  Even dollar bulls, and especially those trading bitcoin.  Good luck.

Iskiab Soul Glow Thu, 08/03/2017 - 12:35 Permalink

That's the dichotomy of management. Those who sound certain are usually idiots, those who aren't sure usually have a better understanding of what's going on but no one listens to them. It's human nature, people want a simple answer but they don't exist.

As a rule of thumb here are some tips for how I operate. Never bet against technology, the invisible hand is true so expect supply to come from unforeseen places if prices change, everyone's a crook and accept nothing on blind faith, and by the time you hear something in mainstream media it's too late and it's at it's peak, and if it's bad news it's an opportunity.

In reply to by Soul Glow

Publicus Thu, 08/03/2017 - 11:40 Permalink

Fracking gives us access to unlimited abiotic oil deep within the depths of the Earth. It's the best renewable we got and the price proves it.

jmack Thu, 08/03/2017 - 13:56 Permalink

how can this guy be long oil after seeing what happened to nat gas ?    The early fracs were all primarily nat gas and nat gas liquids, which is just high gravity  oil. but after nat gas crashed below 5 dollars, the vast majority of drilling in this country has been for oil, it was only a matter of time for price to follow nat gas down, particularly in the perpetual green shoots economy of the Obama era.

Les Grossman Thu, 08/03/2017 - 15:38 Permalink

Did Andy Hall's fall from grace coincide with the rise of Zerohedge ? ;)  Lesson here:  Don't take trading advice from a media outlet that hides it's true identity behind a fictional character from a movie !!!

ds Fri, 08/04/2017 - 01:39 Permalink

His algos not working in deformed markets. particularly OIL. There is liquidity with this global commodity to play but not providing the sustainable income for hedgies' lifestyles. Deformed markets need algos to exploit. Most liquid spaces prioritize. Now this space is the ETF. When liquidity evaporates through rigs in the ETF space, you hold ???