Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
Bloomberg – Commoditrade Inc. plans to introduce an energy hedge fund in the fourth quarter, complementing a fund that invests in industrial metals.
The new fund will use the relative-value strategy followed by the metals fund, Chief Executive Officer David Phipps said yesterday in a phone interview. He declined to comment on the performance of the metals fund, the AMCO Commodity Fund, which Georgetown, Grand Cayman-based Commoditrade bought in February.
Commoditrade and competitors are opening energy funds as oil futures listed in New York rebound from the worst slump ever. Galena Asset Management Ltd. started an energy hedge fund this month that it said may expand to more than $1 billion. Andrew Serotta, who worked for Vitol Group, aims to raise $100 million for an oil hedge fund called Logista Capital.
Bloomberg – OPEC wants U.S. regulators to curtail oil trading by hedge funds and speculators who helped make last year the most volatile in crude oil trading.
Abdalla el-Badri, secretary-general of the Organization of Petroleum Exporting Countries, is seeking rules to “limit the level of speculation” by investors who buy oil without planning to use it. Oil surged 46 percent in the first half of 2008 to a record $147.27 only to plunge by the end of the year, prompting OPEC to make its biggest ever supply cuts.
“OPEC has repeatedly called for the need to reduce the role of excessive speculative activity in the market,” el-Badri, who will attend this week’s World Economic Forum in Davos, Switzerland, said in an e-mailed response to questions. “Today, it is impossible to know who is actually buying and selling oil futures.”
West Palm Beach – A pair of SemGroup LP executives are the only two administrators named to receive bonuses from both the bankrupt Tulsa company and its publicly held and struggling subsidiary, SemGroup Energy Partners LP, tulsaworld.com first reported Thursday.
Pete Schwiering and Jerry Parsons were named among 10 SemGroup LP leaders slated to receive up to $3.8 million in combined incentives if the Tulsa-based company meets or exceeds certain criteria, according to bankruptcy court records in Delaware. The incentives are designed to keep employees on board while SemGroup LP sells off assets or emerges from Chapter 11 protection.
Schwiering and Parsons both could gain up to $468,750 in additional pay under the SemGroup LP incentive plan. Schwiering heads up SemCrude oil operations, while Parsons leads the company’s SemMaterials asphalt unit.
Last month, SemGroup Energy Partners’ compensation committee approved bonus pay for five executives, including CEO Kevin Foxx, Schwiering and Parsons, according to a Securities and Exchange Commission filing.
Parsons’ bonus pay for his SGLP asphalt work totaled $215,000, while Schwiering received an additional $120,000 for leading the public company’s crude oil operations, according to reports.
The parent SemGroup filed for bankruptcy protection July 22 after admitting its traders lost $2.4 billion in failed oil futures transactions. The company also owes $2.5 billion to banks and other lenders and up to $1 billion to oil and gas producers who sold their product on credit, according to reports.
Hedge funds Manchester Securities and Alerian Capital Management gained SGLP board control when the parent company defaulted on a $150 million loan, and the public firm tried to find other, third-party customers for its storage and pipeline services.
SemGroup Energy Partners is not a debtor in the bankruptcy case, but it suffers from its own credit default and cash-flow challenges, records show. Schwiering has worked for SemGroup since 2000, the year that it was founded. Parsons joined SemGroup in 2006. Neither SemGroup LP or SGLP spokesmen could be reached for comment.
Fort Wayne Journal Gazette – During the first six months of 2008, commodities looked to be the savior of investors who were losing money in the stock market. In the second half, particularly for those who had invested in oil, futures contracts were their undoing.
At the start of 2009, commodities have little appeal. Most analysts expect prices to remain under pressure as worldwide demand continues to wane for basic materials of all kinds.
“For commodities to do well, they need demand and they need present demand,” said Matt Zeman, head trader at LaSalle Futures in Chicago. “Until we see the physical demand picking up, we’re going to have a hard time moving forward.”
Investment Week – Castlestone Management is set to launch a hybrid fund investing in both equities and hedge funds.
The group claims managed futures have maintained decent returns throughout the market turmoil and predict the asset class will work well in tandem with equities, which have yet to see a turnaround.
Managed futures use trading processes to access the global futures markets.
Castlestone is currently testing the market appetite for the Defensive Equity fund, with a view to launching the vehicle at the end of January.
Reuters – Volatility spread across stock and foreign exchange markets on Tuesday as investors eyed a Federal Reserve meeting expected to cut interest rates and hint at future unorthodox monetary policies to lift the U.S. economy.
European stocks reversed early losses to put in solid gains after better-than-expected euro zone manufacturing data. The dollar firmed against the euro after earlier hitting a two-month low.
Oil was trading below $45 but was supported by expectations that OPEC will agree its largest supply cut ever later in the week.
The Fed is widely expected to cut interest rates to just 0.5 percent or lower. Futures markets are setting a two-thirds possibility of a 75 basis points cut to 0.25 percent.
Globe and Mail – Once viewed as a safe haven, crude oil has lost its lustre as investors bet that the crisis in financial markets will hurt an already weakened global economy and drive down petroleum demand.
At the same time, speculators who piled into oil and other commodities on the way up have reversed course, as brokerages and hedge funds are being forced to liquidate those positions to buttress their balance sheets, traders said yesterday.
Lehman Brothers Inc. and Merrill Lynch & Co. Inc. are both major players in the crude oil markets, and both companies are expected to unwind their positions after Lehman sought bankruptcy protection and Merrill agreed to be acquired by Bank of America.
Crude prices fell sharply yesterday on futures markets in London and New York after hurricane Ike blew through the Gulf of Mexico without doing major damage to U.S. oil production there.
