Clive Capital LLP, the $1 billion commodity hedge-fund firm founded by Chris Levett, plans to close after posting more than two years of investment losses, according to a letter to clients.
Clive told investors today the London-based hedge fund will shut down at the end of the month, according to the letter, which was obtained by Bloomberg News. The Clive Fund’s Class A shares fell 9.1 percent this year through Sept. 18 after declining 8.8 percent in 2012 and about 10 percent in 2011.
Levett, 43, started Clive in 2007 after leaving Louis Bacon’s Moore Capital Management LLC. Clive is among money managers who have been hurt since the start of 2011 after price swings in markets from oil to wheat whipsawed traders, prompting losses and clients to pull investments.
“We perceive there to be limited, suitable opportunities at this point in the economic-demand and the commodity-supply cycles,” Clive wrote in the letter. “It is also unclear as to when a heightened opportunity environment will return in commodities.”
The commodity hedge fund ended 2012 with $1.95 billion under management, a 46 percent drop from the year earlier. The firm cut fees for its Class B shares after the redemptions to bring them in line with the industry standard of charging a 2 percent management fee and a 20 percent performance fee. Clive, which managed as much as $5.1 billion in May 2011, previously charged clients a 2.5 percent fee to oversee assets and 25 percent of any investment gains.
Some of the biggest commodity hedge funds have closed since the start of last year. BlueGold Capital Management LLP, the $1 billion energy fund co-founded by Pierre Andurand, liquidated in April 2012 after losing 34 percent in 2011, and New York-based Fortress Investment Group LLC shut a $500 million commodities fund after it lost almost 13 percent in four months. Andurand, 36, started a new commodity fund this year.
Assets managed by commodity hedge funds have fallen 5 percent since the end of 2012 to $75 billion, according to Atlanta-based data provider Evestment.
Clive’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. Clive has produced an average annual return of about 9 percent since it started trading in December 2007, according to the client letter, beating the 1.7 percent yearly gain of the Newedge Commodity Trading Index.
Clive told investors that 98 percent of their capital will be returned next month and the remainder once a final audit has been conducted, according to the letter.
Elizabeth Holstein, who heads investor relations at Clive, confirmed the firm sent the letter to clients. She declined to comment further.
Before joining New York-based Moore Capital, Levett worked at trading firm Commodities Corp. He started his commodities career in 1992 at American International Group Inc., where he traded oil. Levett is worth an estimated 250 million pounds ($400 million), London’s Sunday Times reported in April.