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Paul Crone, the former head trader at Touradji Capital Management LP who left the firm in March after seven years, has started a metals hedge fund in New York, according to Citrine Capital Management LLC, his new company.
Citrine, located on the 34th floor of the Chrysler Building, has a team of three led by Crone, who’s chief investment officer, according to a statement. The fund will trade listed derivatives in base metals, gold and platinum-group metals, Crone said in an e-mail interview, declining to specify how much money the fund has raised nor its target size.
Crone, 40, is among traders starting hedge funds this year looking to profit from a bull run in commodities that began last month as policy makers from China to the U.S. ramp up stimulus to boost their economies. Commodity hedge funds tracked by the Newedge Commodity Trading Index advanced 0.9 percent on average in August, erasing the year’s loss.
Citrine hired Mike Connolly, formerly at HSBC Securities USA Inc., as a trader, and Drew Ries, who used to work at Susquehanna International Group LLP, as chief operating officer, according to the e-mailed statement. Energy Alpha Strategies, a London-based commodity-focused investment firm, is a so-called strategic partner, it said.
The Standard & Poor’s GSCI Spot Index rallied 24 percent from the year’s lowest close in June to Sept. 14, with gains last week driven by the decision of the U.S. Federal Reserve to embark on a third round of quantitative easing. Copper for delivery in three months advanced to $8,411 a metric ton on the London Metal Exchange on Sept. 14, the highest level since May 2, and traded at $8,339.75 today. Spot gold surged to a six- month high on Sept 14, backed by record investment holdings.
Crone named the fund after a golden gemstone that’s believed to bring success and prosperity in countries including China, where merchants and traders tend to keep them in their cash drawers, he said. Crone travels to the top-metals consuming nation several times a year for research, he said.
Assets under management at commodity hedge funds rose $1.11 billion to $84.14 billion at the end of July as investment returns more than offset outflows from investor withdrawals from May to July as prices of metals and energy fell, according to the New York-based researcher eVestment|HFN. Crude in New York slumped 18 percent in May, while copper tumbled 12 percent.
“I do expect investments to return to the commodity space,” said Peter Laurelli, vice president of research at eVestment. “Historically, we have seen investor interest for commodity funds come in waves that get disrupted when there is a broadly negative month or two.”
Crone left Touradji Capital in March as head trader of the firm that managed $890 million at the end of 2011, according to a filing. He started his career in 1989 as a floor dealer on the LME at Triland Metals Ltd., a unit of Tokyo-based Mitsubishi Corp. (8058) He also worked at AIG International Trading.
Jean Bourlot, former head of commodities at UBS AG, helped to found London-based Higgs Capital Management LLP, which trades metals, energy and agriculture, with Neal Shear, who spent 25 years at Morgan Stanley, according to an interview with Bourlot in March. Taimur Hassan, who traded energy for Goldman Sachs Group Inc., founded Frere Hall Capital Management, also in London, according to filings to the U.K.’s Companies House.
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