Veteran hedge-fund manager Dwight Anderson announced Tuesday that he was closing the flagship fund in his Ospraie Management, after its commodities portfolio dropped 27 per cent in August on losses in energy, mining and natural resources.
Lehman Brothers may also have been affected by Ospraie’s losses, since the firm purchased a 20 per cent stake in the hedge fund manager in 2005.
Fortunately, Anderson’s fellow Tiger Capital Management alum Paul Touradji is thriving with his copper bets.
Reuters: “Not only as a portfolio manager, but as one of the largest investors in the Ospraie Fund L.P., I have shared in the losses with you,” [Anderson] wrote [in a letter to investors]. “After nine years of striving to be a good steward of your capital, I am very sorry for this outcome.”
He said the decision to close the fund was reached after it breached a threshold which would have allowed investors to redeem their money irrespective of the fund’s lock-up provisions.
This marks the second time in two years that Ospraie Management, which has been a major player in commodities markets, has run into problems. In early 2006 soured bets on copper left the fund down roughly 20 per cent before it pared most of those losses by year’s end.
Also in 2006 Anderson, who made his name in hedge funds at Tudor Investment Corp and Tiger Management LLC, closed down his $250 million Ospraie Point fund…
“I think it’s probably the first of more hedge fund closings to come, given that a significant majority of hedge funds have had negative performance this year,” said Chris Orndorff, head of equity strategy at Payden & Rygel in Los Angeles.
“I think it’s another piece of bad news for Lehman which is unfortunate and it probably raises the stakes on their conversations with the Korean Development Bank,” he said.
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