Andurand returning after BlueGold to cut risks at new hedge fund

Learned his lesson?

Tornado, money Tornado, money

Pierre Andurand, the trader who shut his BlueGold energy hedge fund after it lost 34 percent in 2011, seeks to cut volatility of returns by more than half when he opens a new fund next week.

Swings in performance will be 10 to 15 percent a year at Andurand Capital Management LLP, compared with 40 percent at BlueGold, Andurand said in an interview at his office in London yesterday. The fund will start Feb. 1 trading mostly oil, as well as commodities and foreign exchange, he said. About $200 million has been pledged by investors and assets will probably stay below $1 billion, he said.

“It’s a commodities fund, with a heavy bias in oil,” he said. “I like to keep the door open to other commodities and fx as well, because it gives me a better view on oil and sometimes there’s some good opportunities in those markets.”

BlueGold and some of its largest peers were tripped up in 2011 as commodity markets failed to establish trends long enough for traders to profit from them. It returned 209 percent in 2008, 55 percent in 2009 and 13 percent in 2010. Commodity hedge funds lost an average 3.8 percent in 2011 and 2.6 percent in 2012, according to the Newedge Commodity Trading Index. Fortress Investment Group LLC shut its $500 million fund in May, the same month that billionaire trader John Arnold told investors he would close his Centaurus Energy Fund.

BlueGold team members including Fernando Diamond, an oil analyst, Kieran Fontaine, a metals analyst, Chief Operating Officer Hakon Haugnes and Chief Financial Officer Paul Feldman will join the new fund. Andurand will be the only trader, unlike at BlueGold where there were also buyers and sellers of equities, soft commodities and metals.

High-Water Mark

Former BlueGold investors who place money with Andurand won’t have to pay performance fees until they have recouped any losses, maintaining the so-called high-water mark, he said. The fund targets returns of 15 to 20 percent and will probably get most of the $500 million it seeks in its first three months from BlueGold investors, he said.

Andurand is joined by Duet Asset Management Ltd.’s Tony Hall in attempting to attract investors to a new venture. Hall set up Hall Commodities LLP with former colleague Arno Pilz, according to filings with Companies House, five months after the pair left Duet.

BlueGold, which managed about $2.2 billion at its peak, started trading in February 2008 with a focus on energy derivatives. France-born Andurand, 35, and his co-founder Dennis Crema, 51, worked at commodity-trading firm Vitol SA before forming London-based BlueGold.

Andurand began his career in 2000 as an oil trader at Goldman Sachs Group Inc. Crema, who served as chief executive officer at BlueGold, is not part of the new hedge fund.

“We tried to find a way to part ways, but we couldn’t come to an agreement so we had no other solution” but to close BlueGold, Andurand said. “Looking back, I don’t think it’s a bad thing, because then I can have a rest mentally and recover, then start again with the team I want with the conditions I want.”

Bloomberg News

About the Author
Matthew Brown

Matthew D. Brown is a partner in Cooley LLP’s Litigation Department in San Francisco and a member of the firm’s Privacy, Commercial Class Action Litigation, Commercial Litigation, Intellectual Property, and White Collar and Regulatory Defense practice groups.  Mr. Brown has substantial experience representing companies in federal and state courts in a broad range of litigation, including consumer and privacy-related class actions and cases raising emerging issues at the intersection of law and technology.  Mr. Brown is a member of the American Law Institute (ALI) and a graduate of Harvard Law School.

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