Natural gas hedge fund Statar suffers $130m hit
Ron Ozer’s vehicle was one of the world’s top performers last year
A top-performing US hedge fund specialising in natural gas has suffered a large hit to its performance this month in a sign that even commodity experts are struggling to deal with soaring prices.
Miami-based Statar Capital, which manages $1.7bn in assets and is run by Ron Ozer, a former trader at Citadel and DE Shaw, made a hefty gain in the first 10 days of this month, according to a person familiar with its performance. But it suffered a pullback the following week, leaving it down about 7.7 per cent for September before fees, according to documentation seen by the Financial Times.
The reversal in fortunes wiped out gains made earlier in the month and left the fund with a loss of about $130m in the first two and a half weeks of the month. Statar declined to comment.
Natural gas prices have soared in recent months, fuelled by a rebound in demand and by supply constraints, including lower supplies in Europe and increased competition with Asia for liquefied natural gas cargoes. US prices on commodity futures exchange Nymex have more than doubled this year, while UK prices have tripled. That has helped some computer-driven hedge funds that follow market trends to make big gains, but hurt some traders not prepared for such a rise.
Statar, which trades other commodities as well as natural gas, was one of the world’s top-performing hedge funds last year, gaining 59 per cent, according to figures sent to investors. A number of funds, including Pierre Andurand’s Andurand Capital, were able to make big gains in 2020, either by correctly predicting the drop in oil prices early in the year or from exploiting discrepancies in the market.
This year to the end of August, Statar had gained slightly more than 5 per cent after fees, before this month’s volatility.
The exact reasons behind the loss were not immediately clear. US gas prices have moved around sharply and are now up by about 23 per cent this month, while UK prices are up by nearly 50 per cent.
Statar has lost money in European natural gas but made money in US natural gas this year, said one person close to the firm. On occasion in recent months, it has bet that prices would fall, said a person familiar with its positioning. Commodity funds on average are up 16.8 per cent in the first eight months of this year, according to data group HFR.
Despite recent big gains, commodity trading has been tricky for many hedge funds over the past decade or so. Volatile markets and lengthy periods of declining prices have made it difficult for many traders to make money, leading several to shut funds, including Armajaro Asset Management and Astenbeck Capital Management.
The “exodus of risk capital from the commodity markets” has exacerbated temporary market mispricings, while producers increasingly want to hedge, Statar says on its website. “This has provided the best opportunity set for natural gas trading in many years.”
Ozer, who studied at Massachusetts Institute of Technology, joined DE Shaw in 2008 and focused on trading natural gas futures and options, before moving to Citadel to become head portfolio manager for US natural gas. According to Statar’s website, he was promoted after his first year to report directly to the firm’s founder, Ken Griffin.