How refreshing.
A commodity hedge fund on Wednesday stunned metal investors not by denying forced liquidations; but rather by its oddly honest account of how badly it had done in the month of February.
As Reuters reported on Wednesday, the Ebullio Capital Management fund wrote in a letter to clients that it had suffered its “worst month” since its launch in January 2008, slumping more than 86 per cent in the month.
A performance which looked like this:
The bit from the letter we liked the most, however, was this:
Most Managers would probably try to hush this up and not send out this Newsletter, but we have always been about transparency and having broadcast our winning months, we are going to do the same with our (albeit quite a lot more spectacular) losers and take the heat that comes with the territory.
According to the fund’s manager Lars Steffensen, the fund was forced to liquidate or cancel parts of its physical book and long-held speculative positions (mostly in tin, copper and nickel) due to what he termed some “extraordinary circumstances” — presumably a reference to China’s unexpected tightening measures announced in January.
Interestingly, Reuters reported in November 2009 that Ebullio had control of almost 90 per cent of London Metal Exchange tin stocks and cash contracts.
Not a good time to be long non-ferrous metals, as this is what happened post the China announcement (see the January/February dip):
And here’s tin and nickel (via the latest charts we had to hand from Barclays Capital):
Related links:
Bluegold hedge fund denies causing WTI volatility – FT Alphaville
The business of storage just got more competitive – FT Alphaville
LME cancelled warrants are rising fast – FT Alphaville