Ospraie's Anderson Dives Into Commodities, Survives Swoon

For Dwight Anderson, it was the kind of death-defying ride he hadn't experienced since the last time he jumped out of a helicopter on skis in Alaska. In the first five months of 2006, Anderson's commodities hedge fund firm, New York-based Ospraie Management LLC, suffered a series of setbacks that led to the closing of one of its funds and a 19 percent loss in Anderson's flagship $3.6 billion Ospraie Fund. ``Every single major position we had -- equities, agriculture, energy, precious metals and base metals -- lost money,'' says Anderson, 40, referring to losses in April and May 2006. ``It was highly stressful. You just feel a fatigue in your whole body.''

Ospraie, the world's biggest commodities hedge fund firm, with $7 billion under management, recovered from that crisis -- only to be hit by another much less severe downdraft in July and August, when the U.S. credit markets seized up in response to rising defaults in subprime mortgages. ``August was a very difficult month for commodity hedge funds,'' says David Friche, portfolio manager at Geneva-based Banque SYZ & Co., which invests more than $8.5 billion in hedge funds. ``The fundamentals of demand and supply weren't in place, and people were selling commodities just to get cash.''