Tuesday, February 06, 2007

Red Kite is talk of the town

An interesting article from FT.com centers on well known hedge fund, Red Kite, and its influence over the metals markets.

The fund, and its leading investment managers, have been the subject of some talk lately as market participants are wondering how badly it has been hit by recent declines in copper and zinc.

Excerpt from FT's article, "Red Kite buffeted by heavy winds":

On Friday, the copper price dropped about four per cent and zinc prices fell more than nine per cent. Much of this fall was attributed to fears of heavy losses suffered by Red Kite, which has offices in London and New York. Ever since Amaranth and MotherRock imploded last year on taking the wrong bets in the US natural gas markets, commodity markets have been waiting for the next fund blow-up.

Red Kite was reported by the Wall Street Journal to have lost 20 per cent from the start of the year until January 24. That compares with a six per cent loss suffered over the whole of last month by the basket of base metals on the London Metal Exchange.

Red Kite refused to comment but one investor in the hedge fund, who did not want to be named, said: "There is no surprise that they (Red Kite) lost money last month; everybody did because metal prices fell heavily. There may be a bit of schadenfreude towards Red Kite because they were one of the best performers last year," the investor said.

Lot of info in this piece, with a nice bit of personal color and hedge fund history added. Two of the funds mentioned in this piece, Red Kite and Dwight Anderson's Ospraie, were also highlighted here in last fall's post on commodity-focused hedge funds.