New York Post- One of last year’s best performing hedge funds has hit an epic ice patch, dropping an estimated 22 percent last month after a big bet on copper turned out to be none too shiny.
The November returns stand in stark contrast to last year, when the fund was up 188 percent – a stellar performance given the fund’s nearly $1 billion size.
This year will likely be entirely different, as Bloomberg quoted two investors as saying the fund was down 50 percent.
November’s results mark the second month this year that Red Kite has suffered an eye-popping decline. In August, the fund posted a 20 percent drop.
The likely culprit behind the decline was a combination of the slide in the price of copper and leverage. Like the prices of other popular metals such as nickel and zinc, copper prices have fallen more than 9 percent.
For an aggressive trading fund like Red Kite, the fact that precious metals markets are traditionally less liquid than most bond or stock markets probably hurt as well.
