January 25, 2018 / 7:32 PM / 2 years ago

Exclusive - Commodities fund Jamison Capital to shut: source

NEW YORK/LONDON (Reuters) - Jamison Capital Partners LP, a New York-based macro commodity hedge fund run by former Morgan Stanley trader Stephen Jamison, will shut its nearly $1.5 billion fund by the end of the month, according to a source familiar and an investor letter.

The firm is shutting its Koppenberg Macro Commodity Fund by Jan. 31, according to the letter reviewed by Reuters. The firm will convert into a family office, the source said.

“Commodity trading is tough, with no coupons, dividends, or real price appreciation over time to soften the blows. It’s becoming even tougher,” Stephen Jamison said in a Jan. 24 letter to investors.

The closure of Jamison, one of the largest commodity-focused hedge funds, comes after several other big names have closed shop in recent months. They include hedge fund manager Andy Hall, who closed his Astenbeck Capital Management last summer, and Texas tycoon T. Boone Pickens, who said this month that he was closing his fund, in part due to declining health.

A spokesperson for Jamison did not respond to requests for comment.

In his letter, Jamison said machine learning and artificial intelligence has eliminated short-term trading opportunities for the firm, and long term, commodities do not offer any obvious benefits.

He added that there are wiser places to invest such as master limited partnership (MLP) firms and bitcoin, which he called “digital gold.”

Jamison was down 9 percent last year, according to two other sources familiar with the fund’s returns, driven in part by some losses on natural gas in the second half of the year.

Macro commodity hedge funds returned an average of 0.01 percent in 2017, making it one of the worst-performing strategies last year, according to data from industry tracker Hedge Fund Research.

Commodity trading firms and banks posted major losses in 2017 due to muted client activity and wild fluctuations across energy markets. A number of firms were said to have suffered heavy losses in the first half of the year after the slide in natural gas prices NGc1, while others lost money in the second half due to swings in oil prices during Hurricane Harvey.

Even Goldman Sachs said the second quarter of 2017 was its worst quarter on record in commodities.     

Stephen Jamison, a former Morgan Stanley trader, started the fund in 2009 and mainly invested in commodities, but also other assets when better opportunities arise.

Reporting by Catherine Ngai in New York and Maiya Keidan in London; Additional reporting by Lawrence Delevingne; Editing by Lisa Shumaker

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