Cocoa Hedge Fund King Anthony Ward Said to Post First-Ever Loss

  • Armajaro’s Ward started CC+ in 2007 to focus on cocoa, coffee
  • Profitable bets in coffee helped offset cocoa loss, people say

The CC+ cocoa hedge fund, run by Armajaro Asset Management LLP’s famed trader Anthony Ward, lost money in 2016 for the first time since its inception a decade ago, according to people familiar with the matter.

The loss shows how even one of the most storied traders in the industry was caught out by unexpected moves in cocoa futures, said the people, who asked not to be identified because the fund’s performance is private. Gains from coffee -- the second "c" in the CC+ name -- helped compensate for some of the wrong-way cocoa bets, they said. The loss was in the “high single digits,” one of the people said.

Armajaro declined to comment.

Some of the biggest traders in the cocoa market struggled to navigate the wild swings last year. Olam International Ltd., the third-largest cocoa processor, said in February that trading conditions turned against them, especially in the fourth quarter.

The problems in 2016 were twofold. At the start of the year, cocoa sank along with other commodities despite the worst Saharan winds in three decades, which would later damage Ivory Coast’s crop.

Futures plummeted again as defaults among local exporters forced the Ivorian regulator to re-sell beans at lower prices. The moves hit traders who had bet on tight supplies in the market.

Cocoa Collapse

London cocoa futures, which are denominated in pounds and used to hedge the West African crop, are near a four-year low. Prices sank 23 percent in 2016.

Ward created the CC+ hedge fund in October 2007 and gained prominence as one of the top traders in what is largely a niche corner of the commodities market. In one widely publicized bet in 2010, he took a big position in cocoa on the London exchange, causing other traders to quickly cover their positions and sending prices soaring.

Armajaro managed more than $2 billion at its height in 2011, but like other high-profile funds, it suffered during the recent downturn. In 2015, it closed a $450 million diversified commodities fund and by year-end, assets under management were $500 million, according to a filing to U.K. Companies House.

At least 10 asset managers in natural resources have closed since 2012, including well-known names such as Clive Capital LLP and Centaurus Energy LP and start-ups Higgs Capital Management and Mastic Investment.

Commodity hedge funds posted a gain of 0.9 percent last year, after losing 3.4 percent in 2015, based on data from the SG Commodity Trading Index.

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