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Fortress Investment Group LLC
Clive Capital LLP’s assets plunged 46 percent in 2012 after the commodity hedge fund lost money for a second year running and investors withdrew their cash, said two people with knowledge of the matter.
Clive ended the year managing $1.95 billion, down from $3.6 billion at the end of 2011, said the people, who declined to be identified because the London-based hedge fund is private. The fund declined 8.8 percent in 2012 after falling 11 percent a year earlier, depending on share class, causing some clients to lose patience with its investment performance, the people said.
Clive, started in 2008 by former Moore Capital Management LLC trader Chris Levett, is among commodity funds that have struggled to make money over the past two years after price swings in markets from oil to wheat whipsawed money managers. The Newedge Commodity Trading Index, which tracks some of the biggest hedge funds focused on energy, metals and agriculture, fell 6.3 percent in the 23 months through November, latest available data show.
“Commodity hedge funds had a tough 2012,” said Marcus Storr, head of hedge funds at Feri Trust GmbH in Bad Homburg, Germany. “First, the underlying commodities were weak with the exception of some agricultural products. There were also choppy markets. There were a few outliers, but the majority of commodity hedge funds declined.”
Elizabeth Holstein, who oversees investor relations at Clive, declined to comment.
Clive managed $2.9 billion at the start of October, meaning assets fell by about $1 billion in the fourth quarter of 2012, the people said. The firm bets on the direction of prices as well as seeking to profit from differences in related commodity markets, which is known as relative value trading.
Clive told clients at the start of May that it was getting “bearish on oil” after concluding that other traders had become too confident in an economic rebound following four months of rising stock and commodity prices, according to a letter obtained by Bloomberg News. The bet paid off, with Clive surging 10 percent in May after oil and raw materials reversed into bear-markets.
Clive then missed a July commodities rally that was triggered in part by European Central Bank President Mario Draghi’s pledge to defend the euro currency bloc.
The firm’s difficulty making successful trades demonstrates the challenge commodity traders have faced as the European sovereign debt crisis, concerns about economic growth in China and debates over government spending in the U.S. roiled markets.
Some of the biggest commodity hedge funds closed last year. BlueGold Capital Management LLP, the $1 billion energy fund co- founded by Pierre Andurand, liquidated after losing 34 percent in 2011 and Fortress Investment Group LLC (FIG) shut a $500 million commodities fund after it lost almost 13 percent in four months.
Levett, 42, left Louis Bacon’s Moore in 2007 to start Clive. He stopped taking money from investors two years later after assets climbed to almost $4 billion.
The fund’s Class A shares surged 44 percent in 2008, 17 percent in 2009 and 20 percent in 2010, according to investors. Class B shares, which started later, rose 16 percent in 2008, 16 percent in 2009 and 18 percent in 2010.
Prior to joining New York-based Moore, Levett worked at trading firm Commodity Corp. He started out in commodities in 1992 at American International Group Inc., where he traded oil.
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