Global Advisors, a commodities hedge fund, said today that it will shutter two of its three funds due to “poor performance” that led to investor redemptions. The $60 million Global Advisors Commodity Investment fund and $4 million Global Commodity Index Plus fund will be giving money back at the end of the month.
GA was co-founded by former JP Morgan energy traders Daniel Masters and Russell Newton, who confessed their frustration that “some investors don’t understand the changes in volatility in these markets. Commodity traders can have years of great returns and years of bad ones.” Don’t you just hate it when you get blasted by natural gas (which has tanked this summer without a good hurricane), and your investors just don’t get that? Brian Hunter knows what we’re talking about.
Global Advisors to Shut Two Commodity Hedge Funds [Bloomberg]
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Hedge Funds
Idiot Investors Force Global Advisors To Close Funds, Maybe Gas Prices, Too
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oh man i love it when the fish appears out of left field in posts that are not even specifically about brian hunter.
magnifique!
It’s nice to know that these investors are considered “sophisticated” by the SEC.
Sure they have $200K income or whatever it is, but that doesn’t mean they have any ideas about money.
“sophisticated investors” is a bit of a misnomer. Perhaps the SEC should change the verbage to “mildly financially well-off investors” to more accurately reflect reality, or require some sort of qualification beyond a certain income level or net worth. Orrrr, the funds could just put redemption period clauses into the fund material. Whatever.
Newton and Masters comments about dealing with “bad years” shows why so much capital has been destroyed in the energy trading business.
One doesn’t have to have “bad years”. That is why God gave us brains and deal cops.
I’ll bet the combined age of those two boys is 64.
Actually DM is 45 or so. Good guy. Has a fun rap about energy, but never really has made any “real” money in the markets, without giving it back in the reversals.
I don’t know Newton, but assume he’s the same age.
They are a great example together of how much money has come into the space pursuing average managers. See also Mother Rock, Amaranth, and in the near future Red Kite.
If the regulators don’t catch up with them before their risky and quasi-legal antics do, add Amajaro and Touradji to that list.
If you call yourself a hedge fund youshould be hedgeD against big moves in volatility. If I want vol I will buy an index.
If you call yourself a hedge fund you should be hedgeD against big moves in volatility. If I want vol I will buy an index.
we highly recommend practice/testing etc——-of course who knows—
mike: If you want vol, you can’t buy an *index*. you could do vol futures (illiquid) or straddles/strangles (better). Look up the etymology of “hedge fund” and how it was legally defined. But if you really want to hedge out all risk, go buy t-bills already.
get a clue: If you really want the ultimate hedge, something that is no ones liability, then purchase GOLD Bullion.
sounder77: And where do I keep that bullion? Higher risk of theft, IMHO. Everything has its risks. But in a sense you’re right: For someone who thinks a hedge fund shouldn’t run vol risk, that difference might be too subtle.
get a clue: Would you consider a depository for holding large amounts of physical gold, or failing that, how about a GOLD ETF?