Dec. 30 (Bloomberg) -- The biggest-ever decline in commodities turned Pierre Andurand and Chris Levett into this year’s heroes for investors.

Andurand’s $1.1 billion BlueGold Capital Management LLP hedge fund in London almost tripled between its February debut and November by betting on higher oil prices in the first half of 2008 and then reversing the strategy, the 31-year-old manager said. Levett’s $3 billion London-based Clive Capital LLP returned 44 percent in the first 11 months of the year.

The first bear market in commodities since 2001, as measured by the UBS Bloomberg CMCI Index, cut investments in raw materials to $144 billion from a peak of $270 billion in the second quarter, Barclays Capital estimates. While the CMCI rose almost fivefold from 2001 to 2008, beating stocks and bonds, commodities measured by the Reuters/Jefferies CRB Index fell 53 percent since June and are heading for the worst year in five decades.

“Being short commodities was a highly profitable strategy during the second half of this year,” said Stuart Flerlage, who helps manage $500 million at New York-based NuWave Investment Corp. His fund, with investments including raw materials, rose 51 percent in the year to Dec. 19.

Hedge funds -- private, largely unregulated pools of capital whose managers can buy or sell any assets and bet on falling as well as rising asset prices -- across all markets lost 18 percent on average in the first 11 months of this year, the worst performance in the almost two decades of data compiled by Chicago-based Hedge Fund Research Inc.

Withdrawing Money

Billionaire T. Boone Pickens’s Dallas-based BP Capital LLC allowed investors in its equity fund to withdraw 65 percent of their money, removing the 90-day notice period for anyone informing the firm by the end of October.

“We recognized the economic hardship our investors were experiencing in this market,” BP Capital spokesman Jay Rosser said in an e-mail. There was no withdrawal from the company’s energy fund, he said.

Dwight Anderson’s Ospraie Management LLC shut down its biggest hedge fund in September, telling clients investments in U.S. oil and natural-gas producer XTO Energy Inc. contributed to losses.

By contrast, BlueGold and Clive Capital plan to raise more money in 2009. Andurand, who worked for four years at Rotterdam- based energy trading company Vitol Holding BV, will limit his fund to about $3 billion when it accepts new investors in February. Levett, 38, is capping Clive Capital at $3.5 billion, according to a monthly performance report. The firm declined to comment.

‘Keep it Simple’

Andurand based his trading on an analysis of production, consumption and stockpiles of commodities. “We stuck to what we know best: keep it simple,” the London-based manager said.

Clive Capital made money from energy, precious and industrial metals in November, according to the monthly performance report. Gold added 13 percent last month in London.

The $1.7 billion Merchant Commodity Fund run out of Singapore by former Cargill Inc. traders Michael Coleman, 48, and Doug King, 41, rose almost 23 percent this year, according to an investor in the fund. King declined to comment.

Chris Brodie and Philip Turner’s $810 million Krom River Commodity Fund, introduced in July 2006, returned more than 36 percent in the first 11 months, according to the monthly performance report. The biggest gains last month came from cocoa, soybean meal and coffee, and losses mostly from crude oil.

Cocoa rose 12 percent in November in New York trading after lower exports from Ivory Coast, the biggest grower. Oil lost 20 percent on concern about weaker demand. Short selling is the sale of borrowed assets in the hope of profiting by repurchasing them later at a lower price.

Touradji Capital

Touradji Capital Management LP, founded by 37-year-old Paul Touradji, will start a new fund next year after its flagship Global Resources returned 10 percent in the first 11 months, according to an investor in the fund. New York-based Touradji, who manages $3.5 billion, declined to comment via a spokesman.

Galena Asset Management Ltd., whose $476 million metals fund in London gained more than 16 percent this year, will raise $500 million for an energy fund that it plans to open in the second quarter, Chief Executive Officer Jeremy Weir said in an e-mail.

Metals, energy and most agricultural products slumped this year as a global slowdown shuttered banks and factories and spurred companies to cut jobs, weakening demand for raw materials. As the U.S., Western Europe and Japan headed for the first simultaneous recessions since World War II, Toyota Motor Corp. and General Motors Corp. reduced car production.

Lead, used in car batteries, and nickel, an ingredient for stainless steel, fell more than 63 percent, the most among the 26 members of the UBS Bloomberg CMCI Index.

Investment Losses

Hedge fund industry assets peaked at $1.9 trillion in June, according to Hedge Fund Research. Investment losses and withdrawals may shrink that amount by 45 percent by yearend, according to estimates from Morgan Stanley.

“A lot of asset managers and the hedge fund industry has made a lot of errors this year,” Angus Murray, chief executive officer of New York-based Castlestone Management Ltd., said in an interview this month. “I don’t think anybody expected this sort of decline with regard to valuations and for it to be so quick.”

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net

Last Updated: December 29, 2008 19:01 EST