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Tony Hall was one of Credit Suisse’s best-performing oil traders ever, according to Risk.net.After leaving the firm to start a hedge fund, he told Risk:
Investors can expect performance in excess of 20%. That number is worked out by looking at my trading history.
But there’s one difference between his past years of high returns and now.
The difference is the commodities “tourists” as he calls them:
In the nicest possible way, we are getting more tourists in our market and you have to pay attention to them as it’s a wall of money. I never thought I’d get to the stage where people have oil and metals and ags in their pensions but we are getting to that stage – it’s the way the market’s evolving.
This is yet another example of how alpha is becoming beta because of the sheer mass number of people trading in the markets. Besides the obvious pay advantage of starting your own fund (assuming you’re killing it), the Volcker rule is pushing traders out of banks and into trading firms or hedge funds.
Hall has another reason why it’s better to start a hedge fund than to stay a prop trader at a big bank. He told Risk.Net:
“The major difference on leaving the banking side and entering the investor world is the amount of people you talk to. The relationships you’ve had in many different places really come into their own. When you’re at a bank the other banks are your competitors, but now they’re your clients, so we can all work together.”
Our first thought reading about this guy: Is he any competition for Andy Hall’s commodities fund, Astenbeck? The duel of the star oil traders named “Hall” will begin in 3…2…
No. Tony Hall probably wishes he were. Andy Hall’s Astenbeck now has $4 billion AUM after an incredible year of fund-raising. Astenbeck Capital was officially started a little over a year ago. As of February, it was up about 7%, according to an investor.
Tony Hall founded Duet’s commodities unit in 2009. (The fund it’s part of, Duet Group, was founded in 2002 and has more than $2.4 billion AUM.) Neither Tony Hall’s AUM nor his YTD (or year by year) returns are listed anywhere (that we could find). Since July 2010, he returned 10.2%, according to Risk.net.
But the men have one thing in common (other than trading oil and the same last name): work experience at an oil producer. Occidental’s purchase of Hall’s trading unit in 2009 was great because it allowed Phibro more freedom in the market to lock in the future price of their oil barrels.
Tony Hall also liked working at an oil producer, Glencore:
What appealed to me about working at Glencore was the physical expertise. The physical information combined with financial and derivative knowledge should result in good risk taking and good calls on the market.
Now he trades oil and metals (60% energy and 40% metals) at Duet’s Commodities fund.
And FWIW, it doesn’t sound like he’s worried about losing alpha:
You have to pick the right ones for the right reasons. Some commodities are not only supported by inflation, exposure to the developing world, particularly China, but also fundamentally supported, so when they do go down they are going to be supported by physical buying. Others are being dragged up by the whole market so when they fall they’ll fall faster because they don’t have the support. These are the ones we would short very quickly when things turn round.
Risk.Net’s interview with him is really fantastic. Check it out >