Ospraie to Close Flagship Hedge Fund After 38% Loss
Sept. 3 (Bloomberg) -- Ospraie Management LLC, the investment firm run by Dwight Anderson, will close its biggest hedge fund after slumping 38.6 percent this year because of bad bets on commodity stocks.
The New York-based Ospraie Fund fell 26.7 percent in August after a ``substantial sell-off'' in energy, mining and resource equity investments, Anderson said in a letter to investors yesterday.
Losses at Ospraie, once the largest commodity hedge fund firm, underscore how the sudden swing in commodities caught even experienced managers off-guard. The Morgan Stanley Commodity Related Index of 20 mining, energy and agricultural companies declined 13 percent in July and August as the slowing global economy cut demand for raw materials.
``Commodities have been the story du jour, what with China's 1.2 billion population industrializing,'' said Peter Rup, chief investment officer at New York-based Orion Capital Management LLC, which invests in hedge funds. ``It's easy to find a trend and ride the train. The problem is, managers don't know when to get off it.''
The shuttering of the Ospraie Fund, which opened in 1999 and managed $2.8 billion at the start of August, leaves Anderson's firm with three funds overseeing more than $4 billion of assets, down from $9 billion in March.
``I am extremely disappointed with this result and the fund's sudden reversal in performance,'' Anderson, 41, said in the letter. ``After nine years of striving to be a good steward of your capital, I am very sorry for this outcome.''
Jonathan Gasthalter, a spokesman for Ospraie, declined to comment.
ConAgra Foods
Lehman Brothers Holdings Inc., based in New York, bought a 20 percent stake in Ospraie Management in 2005 and Zurich-based Credit Suisse Group AG invested an undisclosed amount the following year. Ospraie this year bought ConAgra Foods Inc.'s commodity-trading unit for $2.8 billion.
The Ospraie Fund had returned an average of 15 percent annually through the end of last year. Anderson generally invested about half of the fund in shares of natural-resource companies and the rest in commodity futures such as oil and zinc. Investments are usually held for two years.
Sept. 3 (Bloomberg) -- Ospraie Management LLC, the investment firm run by Dwight Anderson, will close its biggest hedge fund after slumping 38.6 percent this year because of bad bets on commodity stocks.
The New York-based Ospraie Fund fell 26.7 percent in August after a ``substantial sell-off'' in energy, mining and resource equity investments, Anderson said in a letter to investors yesterday.
Losses at Ospraie, once the largest commodity hedge fund firm, underscore how the sudden swing in commodities caught even experienced managers off-guard. The Morgan Stanley Commodity Related Index of 20 mining, energy and agricultural companies declined 13 percent in July and August as the slowing global economy cut demand for raw materials.
``Commodities have been the story du jour, what with China's 1.2 billion population industrializing,'' said Peter Rup, chief investment officer at New York-based Orion Capital Management LLC, which invests in hedge funds. ``It's easy to find a trend and ride the train. The problem is, managers don't know when to get off it.''
The shuttering of the Ospraie Fund, which opened in 1999 and managed $2.8 billion at the start of August, leaves Anderson's firm with three funds overseeing more than $4 billion of assets, down from $9 billion in March.
``I am extremely disappointed with this result and the fund's sudden reversal in performance,'' Anderson, 41, said in the letter. ``After nine years of striving to be a good steward of your capital, I am very sorry for this outcome.''
Jonathan Gasthalter, a spokesman for Ospraie, declined to comment.
ConAgra Foods
Lehman Brothers Holdings Inc., based in New York, bought a 20 percent stake in Ospraie Management in 2005 and Zurich-based Credit Suisse Group AG invested an undisclosed amount the following year. Ospraie this year bought ConAgra Foods Inc.'s commodity-trading unit for $2.8 billion.
The Ospraie Fund had returned an average of 15 percent annually through the end of last year. Anderson generally invested about half of the fund in shares of natural-resource companies and the rest in commodity futures such as oil and zinc. Investments are usually held for two years.
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