Red Kite Management, a $1bn metals-trading hedge fund, has suffered losses of up to 15 per cent so far this year - and is now trying to stall investors who might want their cash back, MarketWatch reports, citing documents it has obtained, as well as people familiar with the firm’s performance.
The news sparked heavy falls on the metals markets, with one stressed trader declaring to Reuters: “The market is collapsing.”
Red Kite, run by Michael Farmer, Oskar Lewnowski and David Lilley, has reportedly asked investors in its metals fund to approve an amendment that would require 45 days notice before money can be withdrawn - up from 15 days. The change will mean that investors have to send redemption notices to Red Kite by Feb. 15 to get their money back at the end of the first quarter.
Red Kite’s problems reflect the volatility inherent to commodity markets. Last year, returns generated by the firm’s Compass fund - which bets on metal prices - topped 90 per cent, MarketWatch said. But copper prices have slumped more than 20 per cent since December, with March futures trading at around $2.53 a pound - down from December’s highs of $3.29.
The report had a marked impact in the metals markets on Friday afternoon. In trading on the London Metal Exchange the price of copper fell 6 per cent, while aluminium was down 3 per cent and zinc slumped more than 8 per cent. “Fund liquidation…a lot of stops triggered…a lot of the stuff on the back of the Red Kite news,” another trader told Reuters.
This entry was posted by Stacy-Marie Ishmael on Friday, February 2nd, 2007 at 16:14 and is filed under Capital markets, Hedge funds.
Tagged with lme, red kite.
