Armajaro Dumps Cocoa Horde At A Loss

Dec 17 2010 | 9:36am ET

Armajaro Asset Management's bold bid to corner the cocoa market has come to a bittersweet end this holiday season.

The London-based commodities hedge fund bought up nearly all of the available stocks of cocoa this summer, some 240,000 metric tons of the brown stuff. It was the largest cocoa delivery on London's LIFFE exchange in 13 years and 20 times as large as the previous delivery, representing some 7% of annual production.

Armajaro's bet looked pretty good at first, helping to drive cocoa to a 33-year high. But you can't predict the weather—and you certainly can't predict the weather in the Ivory Coast from London. But the African country, which produces about 40% of the world's cocoa, enjoyed some good weather, at least for cocoa production, helping ease the market and sending cocoa prices in London down by almost £1,000 per metric ton.

Armajaro sold off its entire stake between September and this month. The hedge fund was responsible for the delivery of most of the 109,960 metric tons of cocoa delivered this month, the Financial Times reports.

While the chocolate bet was a bust for Armajaro and co-founder Anthony Ward, nicknamed "Choc Finger" by the British press, the firm's CC+ fund remains up for the year, thanks both to its successful hedging of the long cocoa bet and the success of the other half of its portfolio, which invests in coffee.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

Often seen as a passion project, or part of a philanthropic venture, rare and fine stringed instruments offer an exciting option to diversify one’s investment portfolio while providing an opportunity for an exceptional long-term investment.