Commodity-Focused Hedge Fund Loses 86% In February

Mar 16 2010 | 12:58pm ET

While taking an almost $43 million dollar hit may sound like mere bump in the road for big, billion-dollar-plus hedge funds, that amount isn’t chump change for one manager—it is almost his whole portfolio.

Ebullio Capital Management’s commodity-focused fund lost more than 86% in February, according to an investor letter obtained by Bloomberg News.

The losses, which brought the firm that was managing $42.3 million in November to a paltry $1.47 million last month, were caused by losses in industrial metals, according to the letter. Lars Steffensen, founder of the firm, wrote that oil, wheat, gold and sugar were strong performers for the fund last month, but those gains were more than wiped out by the firm’s bets on copper, nickel and tin.

On average, commodity hedge funds were up 1% last month and down 2.2% year-to-date, according to Hedge Fund Research.

U.K.-based Ebullio was up 29% last year and 92% in 2008, a year that saw unprecedented losses in the industry.

“We took the hit,” Steffensen told Bloomberg, but he added that he always bounces back.  Steffensen said that he is indeed returning money to investors wishing to redeem.

The Ebullio Commodity Fund, an event-driven offering, debuted in January 2008 with $4 million in partner capital. In addition to the commodity fund, the firm also makes other energy-related investments.

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