UPDATE 3-In split from SocGen, TCW's fortunes seen set to rise
By Greg Roumeliotis and Jessica Toonkel and Jennifer Ablan
* Funds with $10 bln between them see losses through May
* Some count on fundamentals to override stimulus worry in H2
* Astenbeck, Brevan Howard and Higgs among better performers
* Andurand, Merchant Commodity, Taylor Woods rise above pack
By Barani Krishnan
NEW YORK, June 13 Commodity funds with combined assets of about $10 billion are heading for the half-year mark with losses, with some hoping that improving market fundamentals will overpower worries over global growth and stimulus measures in the second half.
The funds, run by some of the most high-profile commodity traders such as Andy Hall, Stephane Nicolas, Chris Levett, Neal Shear and Chris Brodie, have declared negative returns through the first five months of the year, performance data from their investors showed on Thursday.
A few -- including Hall's $4.5 billion Astenbeck Capital Management in Westport, Connecticut, and the $845 million Brevan Howard Commodities Strategies Fund that Nicolas manages in Geneva -- were actually up in May but pulled down for the year by weaker results in earlier months.
Commodity prices mostly tumbled in May. Crude oil fell for a fourth straight month and gold slipped for a second month in a row as investors worried about whether the U.S. Federal Reserve and other central banks will crimp their free flow of easy money despite patchy global growth.
Stimulus programs by central banks have been among the biggest drivers of commodity prices in recent years. Bank of Japan said this week it will not enlarge a $1.4 trillion stimulus it announced in April, reigniting worries that the Fed might taper its monthly $85 billion purchase of U.S. bonds.
CENTRAL BANKS VS REAL ECONOMY
"Markets continue to fixate on central bank policy rather than the real economy," Astenbeck's Hall said in a letter to investors in May, a copy of which was obtained by Reuters.
"As we move into June, 3Q and beyond, there will be a very substantial pick up in global oil demand," wrote the 62-year old billionaire, famed for a $100 million pay-day in 2008 when his trading company was owned by Citigroup.
Astenbeck posted a 3.7 percent gain in May -- its best since a 4.4 percent return in January -- according to data obtained from its investors.
Despite that, the fund was down about 1.7 percent for the year through May. Much of that was the result of a near 9 percent loss in April, which was its worst decline in 11 months.
Astenbeck's specific bets on commodities were not known and it did not respond to Reuters' requests for comment.
But Hall is a well-known oil bull who had shown a long bias toward platinum, palladium, corn and gas in previous letters to Astenbeck's investors. Copper and platinum were among the few commodities that rallied in May.
"'The commodity super-cycle is over', is the current mantra," Hall wrote in his May letter. "We think this received wisdom is flawed."
The U.N. Food & Agriculture Organization said in a report this month many hedge funds made money from the 2007/2008 food crisis by riding wheat, corn and soybean prices to their highs, and their momentum for profit has slowed.
"As with most mature businesses, commodity hedge funds are nding protability harder to come by," it said.
Nicolas' Brevan Howard Commodities posted a monthly gain of 0.3 percent gain through May 17. Year-to-date, it was down 2 percent. Previously an energy options trader at Bank of America , Nicolas manages a modest fund in U.K.-based Brevan Howard Asset Management, which is Europe's largest hedge fund manager with more than $36 billion under management.
Shear's Higgs Capital in London, a $350 million fund that he co-runs with Jean Bourlot, was up 1.2 percent gain on the month through May 24. For the year, it was down 1.8 percent. Shear, 58, is one of the best known names in the commodities world, working 25 years at Morgan Stanley before moving to private equity firm Apollo Management and Swiss bank UBS prior to setting up Higgs.
A BAD MAY FOR SOME
For some funds, May was a bad month.
Levett's $1.4 billion Clive Capital in London suffered a sharp enough loss to wipe out a rebound the fund had been building since the steep losses in two earlier years. The fund run by the former Moore Capital trader fell 3.3 percent through May 24. For the year, it was down 1.5 percent.
Brodie's Krom River Commodity Fund in London, which has about $530 million in assets, was down 0.6 percent on the month through May 24. Year-to-date, it was down 2.7 percent.
The $1.0-billion Aramajaro Commodities Fund, run by John Tilney out of London, was down 0.3 percent for the month through May 24. Year-to-date, it was up 2.5 percent.
The fund with one of the worst declines on the year was Colin O'Shea's $345 million DB Platinum Hermes A.R. Commodity Fund in Luxembourg, which was down 6.5 percent. Its monthly drop through May 24 was 2.5 percent.
None of the funds responded to Reuters requests for comment.
A FEW STARS
Some commodity funds are up on the year, after a weak patch in previous years.
Pierre Andurand's $250 million energy-focused Andurand Capital was one, making a modest loss in May while being up 25 percent on the year, investors in the London-based fund said. Andurand, a former Vitol and Goldman Sachs trader, is rebuilding himself after closing his previous BlueGold fund with massive losses last year.
The $200 million Merchant Commodity Fund, founded by Mike Coleman in Singapore and run out of London by his partner Doug King, rose 16.4 percent through May 31. For last month, the fund was up 2.8 percent.
Coleman, also rebuilding Merchant which had once managed up to $2.5 billion, confirmed the returns. Investors said the fund profited from betting on falling prices of iron ore, coal and rubber.
Another star performer this year was Taylor Woods Capital Management, an $800 million fund in Greenwich, Connecticut, run by George "Beau" Taylor, former co-global head of commodities at Credit Suisse. The fund was up nearly 3 percent through May 31 and rose about 10 percent on the year by being short on metals and coal and long on gas and oil, investors said.
By Greg Roumeliotis and Jessica Toonkel and Jennifer Ablan
* Defendant's federal conviction was overturned in February
* Alternatives to Libor to be found for some contracts