Tags: Oil | Hedge | Fund | BlueGold

Oil Hedge Fund BlueGold to Liquidate

Friday, 06 Apr 2012 09:47 AM

 

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BlueGold Capital, an oil-focused fund that made headlines in 2008 by calling the peak of the market, is liquidating after four years of trading — the last of which put it at the bottom of commodity hedge fund rankings.

BlueGold is conducting an "orderly closure" of its business and expects to return about 98 percent of investor capital n ext month after calculating its April net asset value, the London-based fund said in a letter to investors on Thursday, a copy of which was obtained by Reuters. The remainder should be returned before year-end.

It did not give a reason for its closure. A person who answered the phone at BlueGold's London office declined comment.

BlueGold was one of the worst performers among commodity hedge funds last year, industry data gathered by Reuters shows. It lost 35 percent through 2011 and its asset base shrunk to about $1.2 billion from $2 billion a year a before.

The fund was co-founded by former Vitol oil trader Pierre Andurand, who made his mark with a more than 200 percent gain in 2008 as other rival funds suffered.

However, it appeared to veer from its energy roots last year, irritating some investors by placing half its bets on equities and other assets, Reuters reported in December.

An investor who redeemed money from BlueGold in January said he still regarded the fund as "a pretty talented group" that may have given investors concern about the risk it was taking, its apparent change in tack and the rapid growth in assets until last year.

"Performance is always a symptom that something is going wrong, even when things may otherwise seem fine. For instance, if you're constantly hitting the sweet spot, you might be extremely skilled, but you could also either be taking too much risk or getting lucky," the investor said.

"In BlueGold's case, they also took in a lot of money, which when fully invested, meant more risk being deployed. And as far as process and trading methodology is concerned, investors also don't like it when you say you're changing your stripes midway."

Andurand, a 35-year-old Frenchman, has made a name for himself in pursuits as divergent as sports, oil trading and movie-making.

Andurand is an avid kickboxer and former member of the French junior national swimming team. He's also a director at Shangri La, a Chinese movie production company that has three films to its credit, with the latest, "Sin-Jin," due to be released in December this year.

In the oil market, he took bold bets that once paid handsomely for him and his investors.

His meteoric rise in trading came after he moved to Singapore in 2000 after earning finance and engineering degrees from top French universities. He started as an oil trader at Goldman Sachs, then climbed the ranks at Bank of America and Swiss oil trading giant Vitol before launching BlueGold with Vitol colleague Dennis Crema in early 2008.

Several oil traders said Andurand had earned a $20 million bonus in one year at Vitol, after helping the company book a trading profit of $200 million. The bonus figure could not be confirmed, but in 2008 Andurand and Crema both made the ranks of the world's top 20 hedge fund earners, with payouts of $90 million apiece, according to research firm Hedgeable.

Andurand's near-perfect run in 2008 became the stuff of oil market lore. He accurately anticipated crude's rise to a record $147 a barrel in July of that year, then shifted positions to cash, ending BlueGold's exposure as prices fell to as little as $33 in December, people who tracked the fund said. The fund was up 209 percent that year.

BlueGold also made money in 2009, returning a commendable 55 percent.

Its winning streak ended last year as oil prices were locked in a range through most of the year, thanks to intermittent spikes in the dollar and a mixed global economic outlook, before breaking out in a late rally.

Even before BlueGold's fortunes turned, Andurand faced major losses. In 2003, he was a principal oil trader in the Bank of America team that suffered a loss of up to $89 million in the jet fuel market when the SARS virus led to a collapse in air travel worldwide.

In February 2010, BlueGold was briefly thrust into the spotlight when a sudden crash in oil markets brought the fund down as much as 14 percent. It, however, recovered to finish up nearly 13 percent that year.

© 2014 Thomson/Reuters. All rights reserved.

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