Remember that Houston-based energy fund we told you about yesterday? The one found itself on the wrong side of a natural gas futures trade? This morning the wires have named the fund as Saracen Energy, which matches what DealBreaker was told by readers yesterday.
“The spread between March and April 2009 natural gas futures leaped by more than 50 percent in the week between Feb. 7 and 14,” Reuters reports. For the year, it has almost doubled. Saracen had apparently went short March 2009 gas futures and long April 2009, and got crushed as the spread blew out.
How bad are the losses? Reuters says the fund lost up to $400 million. Platts says it’s more like $700 million to $800 million. Saracen denies rumors that it is selling its book to Goldman Sachs, and tells has sufficient liquidity to continue operations. But a 2006 report detailing the fund’s size before these losses put it at around $1.4 billion, meaning it may have lost half its assets under management in this trade. Amaranth, which suffered serious losses in 2006 after getting on the wrong side of the March-April calendar-spread bet, initially made assurances that it had enough funds to continue operations. Within a matter of days, Amaranth collapsed.
The losses are a major setback for Saracen. Earlier this year, Saracen lost a top trader, Bill Reed, to the Louis Dreyfus Highbridge Energy LLC, an energy trading operation launched by Highbridge Capital Management LLC and Louis Dreyfus Group.
Energy fund Saracen has big natgas trading loss [Reuters]
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Saracen Gets Crushed As March-April Natural Gas Spread Widen
By Joe WeisenthalComments (20)
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Ummm…the last two paragraphs don’t make sense.
In the last two paragraphs, are you saying Bill Reed put the trade on at Saracen before he left to join Highbridge? Nobody took responsibility for the massive position that was sitting on the books?
And Arnold’s probably on the other side of the trade – “Spreads? Whatcha talking bout?”
Confused…where in the world is Bill Reed?
You know Julia Louis-Dreyfus is an heir to that fortune right? When I was young I thought she had that name due to her marriage with Richard Dreyfus.
A Billionaire heiress and the fucking greatest television show of all time? Really is it like that god? Why have you forsaken me?
She must think Seifeld’s Porsche collection is about as gauche as Gucci loafers.
This post deserved a title like… “Saracen Gets Crushed, Panthers Fail to Make Playoffs”
Bill Reed has been gone from Saracen since sep ’07 and has nothing to do with this position. If anything, this highlights how important Bill R really was to Saracen’s previous sucess and how lucky LD/HE is to have him.
This post deserved a title like “Saracen Gets Crushed, Panthers Fail to Make Playoffs”
Anybody posting as guest read your profile and the posts you’ve made? Handbags and haircuts? Shopping in Nashville. I’m telling ya people: feminine disposable product ads aren’t far behind at this rate! Maybe this site is going to be renamed femaledealbreaker.com.
When you go 12 months out on the curve and put on a ginormous position in the Widowmaker spread (Mar/Apr NG), and you think it’s “safe” because after all it’s a “spread” and it’s “a year away” for God’s sake and the “model” says it’s the thing to do but you can’t remember where you acquired the “model”, you have to remember that someone sees all those trades and after a whiskey or two under the neon lights of an establishment frequented only on the broker’s Amex, well, the word probably got out and maybe Brian Hunter should teach a course on this subject because all the newbies are getting killed doing the Widowmaker.
pie
Carney…stop writing. you suck at it.
Widomaker is right 100%. Jr trader move…but as they say in texas…”ain’t nothin to be learned from the second kick of a mule.”
Of course Bill new of the position… Why do you think he bailed…
glad I didn’t go and work with these guys
please get the facts right…Bill R left in Sep ’07.
Well I did work for them. 2nd partner to leave in three years… Not a good sign then and throw in today’s news: an even worse sign!
Bill didn’t bail….he was “asked” to leave……with a nice payoff I’m sure he’ll be getting over the next 3 years….
BTW…the first partner didn’t go willingly either
Pinnacle pull 100m from Saracen…cuz they’re stupid. Who are these Fks? Get Out!
Pinnacle pull 100m from Saracen…cuz they’re stupid. Who are these Fks? Get Out!
Dear Reader,
It’s reallt called the crush spread, more of an ags term really. But seriously it’s a blip
Opus Commodities Fund Ltd.
NAV
May 31 2008 May 31
2008* YTD* 2008*
A (USD) 3.31% 4.45% 134.93
B (EUR) 3.41% 4.82% 129.16
E (GBP) 3.48% 5.25% 131.07
CHF (CHF) 3.28% 4.24% 112.29
May 2008
9.17%
1.0b (USD)
11.43% 7.19%
Annualized
Volatility*
10.82% 6.90%
6.83%
7.20% 6.60%
Opus Commodities Fund Ltd. AUM
1st June 2008
Share
Class
Performance Annualized
Return*
Since Inception
Dear Investors,
For the month of May 2008, the Opus Commodities Fund returned 3.31% net in the USD share class, 3.41% net in the EUR share
class, 3.48% net in the GBP share class and 3.28% net in CHF share class. Year to date returns stand at 4.45%, 4.82%, 5.25% and
4.24% respectively.
For the second month running, the portfolio benefitted from strong returns across the board with more than 95% of component
funds positive. Returns reflected rallies in crude oil and natural gas for which our funds were well positioned and a further recovery
in small-cap equity values.
May was the most eventful month for the global crude oil market since the first Gulf War in 1991. The crude oil price rapidly rose by
19% to break $135 on May 22 before retracing back to $127 at month end. High crude prices were accompanied by a sharp
expansion in crack spreads so that the impact on some oil consumers, particularly in the area of diesel and other distillates, was
further amplified. The sharp swings in the price of crude oil reflect the fact that markets are torn between concerns about oil supply
falling short of expectations and an understanding that these prices levels are finally choking off demand. Hydrocarbon demand is
regarded as inelastic; in Western countries people are slow to modify their behavior in response to price. Supply by contrast was
regarded as elastic. Free market advocates and oil industry lobbyists have argued for years that successively higher oil prices
would incentivize exploration and new discoveries would offset depletion. Recent gyrations suggest a new paradigm: inelastic
supply meets inelastic demand. Basic economics is clear as to where this leads – greater price variation in response to any shift in
either supply or demand.
Consumer pain at paying more for energy is attracting the attention of politicians. It is clear that politics and the response of policymakers
to the higher commodity price environment are crucial issues in 2008. During May, the US CFTC (futures markets
regulator) launched an investigation into claims that market prices were manipulated. It also faces calls to review the ‘hedge
exemption’, a regulatory safe harbor that allows banks to maintain massive open positions on US exchanges without regulatory
limitation. In addition, an intriguing position paper was presented to the US Department of Homeland Security that contended that
index investing, as practiced by major institutional investors, contributed to world food distress and endangered US national
security. So far the practical policy response has been scant, ranging from calls in both the US and Europe to cut taxes on
hydrocarbons (a step bound to raise demand for a resource in short supply and hence counterproductive), to calls for windfall profits
taxes on domestic US oil companies, to simple pandering to industry lobbies and undefined promises of action. In a world of
inelastic supply and demand, the high price of hydrocarbons is a solution, not a problem, because only painful price increases
modify behavior. Agricultural commodities and metals were firmly out of the limelight in May with both subsectors experiencing
declining prices. Equities in commodities sectors rallied in response to higher energy prices and the benchmark indices rose
sharply. Obviously with all of this activity in hydrocarbons, the major indices rose over the month with the benchmark SP Goldman
Sachs Commodity TR Index up +9.1% and the Dow Jones – AIG TR Index rising some 2.7%.
Our funds largely benefitted from the rally in energy this month but reduced their risk as the month progressed. We enter June with
lower net oil price exposure and reduced agriculture exposure but with a continued decisive long natural gas positions and funds
remain friendly to small cap equities whose values have yet to reflect higher energy prices.
We added no new funds on June 1.
We thank you for your continued trust and confidence.
Marc Hotimsky Georges Saier David Mooney
co-CIO co-CIO Portfolio Manager
* The estimate was calculated from estimates received from the hedge funds included in the portfolio. Although the information is
believed to be correct, no warranty is given as to the accuracy of the information provided.
This confidential document is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities
or instruments described herein.
Performance (net of all fees)
Jan Feb Mar Apr May* Jun Jul Aug Sep Oct Nov Dec Year*
2008 -2.22% 2.82% -2.40% 3.05% 3.31% 4.45%
2007 -1.91% 1.97% 0.44% 0.74% 0.34% 1.21% 1.16% -2.51% 1.43% 0.94% -0.89% 1.80% 4.71%
2006 4.77% -0.85% 3.45% 4.78% -0.48% -0.99% 0.59% -0.68% -1.81% 2.36% 3.41% 1.00% 16.35%
2005 1.32% 0.11% 0.37% -1.13% 2.51% 2.76% 6.03%
2008 -2.26% 2.84% -2.23% 3.14% 3.41% 4.82%
2007 -2.12% 1.84% 0.33% 0.61% 0.23% 1.11% 1.05% -2.64% 1.27% 0.89% -0.96% 1.78% 3.33%
2006 4.45% -0.97% 3.21% 4.40% -0.68% -1.14% 0.41% -0.92% -2.00% 2.21% 3.08% 0.87% 13.37%
2005 1.21% -0.03% 0.21% -1.26% 2.42% 2.59% 5.20%
2008 -2.13% 2.95% -2.17% 3.19% 3.48% 5.25%
2007 -1.93% 1.97% 0.44% 0.75% 0.33% 1.23% 1.17% -2.50% 1.45% 0.98% -0.82% 1.91% 4.98%
2006 4.59% -0.86% 3.46% 4.54% -0.52% -1.05% 0.51% -0.75% -1.89% 2.34% 3.28% 0.99% 15.32%
2005 2.87% 2.87%
2008 -2.39% 2.71% -2.38% 3.13% 3.28% 4.24%
2007 -2.25% 1.72% 0.23% 0.54% 0.08% 1.00% 0.91% -2.77% 1.15% 0.78% -1.10% 1.68% 1.88%
2006 1.87% 2.98% 0.78% 5.73%
Commodities – Trading 78.2%
Anglian Commodities Fund 5.6%
Blenheim Global Markets Fund, Ltd. 2.5%
Blenheim Commodity Fund 7.5%
Brocade fund 2.2%
Galena Fund Ltd 6.0%
Galtere International Fund 5.9%
Kottke Swinford – Managed Account 2.6%
Ospraie Fund Ltd 3.2%
Tyticus Overseas Partners Ltd 5.3%
CMF Sandridge Feeder (Cayman) Ltd. 4.1%
Saracen Energy Offshore Ltd. 5.0%
Velite Energy Offshore Ltd 5.9%
Touradji Global Resources Offshore Fund Ltd 7.5%
AAA Asset Management Offshore Fund Ltd 3.2%
CC Plus Fund 3.4%
Isolated VaR (Sum of Underlying Funds) 9.02% Fortress Commodities Fund LP 4.0%
Marginal VaR (Sum of Underlying Funds) 3.95% Phibro Offshore Commodites Fund Ii Ltd 4.3%
Diversification Ratio 2.28 Commodities – Equity 12.8%
Marginal VaR Contribution by Strategy HedgeEnergy Offshore Fund Ltd 1.6%
RAB Energy Fund (USD Class) 2.4%
Sector Maritime Fund Ltd 2.8%
Southport Energy Plus Offshore Fund Inc 4.1%
Galena Special Situation 1.9%
Commodities – Farm 5.9%
Cash 3.1%
Performance Attribution by Strategy (since inception)
Performance Attribution by Strategy (1 Month)
Fund Allocation by Strategy (as of 1st June 2008)
A (USD)
B (EUR)
E (GBP)
CHF (CHF)
VaR Analysis
List of Holdings (as of 1st June 2008)
0 500 1000 1500 2000 2500 3000 3500
Commodities-Trading
Commodities-Equity
Commodities-Systematic
Contribution (Bps) – Class A USD