The $1.1 billion Fortress Commodities Offshore Fund Ltd. had its best month ever in August by betting on price declines for oil and copper, beating bigger rivals Clive Capital LLP and BlueGold Capital Management LLP.
Fortress, the commodity hedge fund run by William Callanan, rose 6 percent last month and has now gained about 1.8 percent in 2011, according to two people with direct knowledge of the matter who declined to be identified because the data isn’t public. Chris Levett’s Clive Fund fell 0.2 percent last month and Pierre Andurand’s BlueGold Fund lost 12 percent, according to investors.
The Standard & Poor’s GSCI Index, which measures movements in commodity prices, fell 1.85 percent in August on concern that slowing economic growth would hurt demand for oil, nickel and copper. Gold, which Fortress was betting would rise, surged 12 percent to $1,825.72 an ounce last month as investors sought a haven from riskier assets.
“We are quite concerned about the economic contraction that may unfold, and as a result, we intend to be an active seller of rallies in base metals and energy,” Callanan, who has worked at Soros Fund Management LLC, said in a letter to investors dated Aug. 19. “Our core belief in the potential for the gold market is steadfast and this will remain in the foreseeable future.”
The Fortress fund, which started trading in January 2008, is part of New York-based Fortress Investment Group LLC. (FIG) Callanan, 40, joined Fortress in August 2007 after previously working as chief investment officer at Rubicon Fund Management LLP, a London-based hedge fund.
From 2000 to 2003 he worked at Stanley Druckenmiller’s Duquesne Capital Management LLP, and prior to that he was employed by George Soros’s Soros Fund Management. Callanan declined to comment on his August gains.
London-based Clive Capital, which oversees about $4.8 billion, is now down 11 percent this year, said the investors, who declined to be identified because the fund’s performance is private. BlueGold, which managed $2.3 billion at the end of April, has fallen 25 percent in 2011, investors said.
A spokeswoman for Clive declined to comment. BlueGold’s Andurand didn’t return a phone call and email seeking comment.
The $1.1 billion Merchant Commodity Fund, founded by ex- Cargill Inc. traders Doug King and Michael Coleman, lost 3.9 percent in August, taking the year’s loss to 32 percent, the two people said. Singapore-based Coleman declined to comment. The fund advanced 256 percent since starting in June 2004 through June this year and never had a losing year, according to a fund document.
The $820 million Krom River Commodity Fund rose 1.9 percent in August on gold, corn, soybeans and coffee, Chris Brodie, its fund manager and founder, said in an e-mailed letter to investors that was obtained by Bloomberg.
Arabica coffee futures climbed 20 percent last month, the highest gains among the 24 raw materials tracked by the S&P GSCI Index, followed by a 15 percent advance in Chicago-traded corn.
Tony Hall’s Duet Commodities Fund Ltd., which oversees about $100 million, gained 1.65 percent in August to boost 2011 returns to 33 percent, according to an investor.
Declining prices for oil and metals prompted some clients to withdraw money from hedge funds that invest in commodities. Ernesto Prado, chief investment officer at Ayaltis AG, said he redeemed investments in three commodity hedge funds during the first six months of 2011 to invest in firms that trade bonds.
“Commodities are going to be very volatile and erratic this year,” said Prado, whose firm oversees $300 million. “Demand from China may slow as the economies in the U.S. and Europe deteriorate under the weight of debt.”