Hedge Fund SHK Liquidates, Rattles Gold Market

Jan 31 2011 | 1:41am ET

The demise of one small hedge fund roiled the gold market on Friday.

SHK Asset Management founder Daniel Shak decided to pull the plug on his fund and its sole investment: spread trades on Comex gold futures. While the firm managed just $10 million before gold's recent decline, SHK held $850 million worth of gold contracts. Dumping them last week led to the largest single drop in the number of contracts on the Comex ever.

"Yeah, that was just me liquidating my spread position," Shak told The Wall Street Journal. "I had a significant, fully-margined position. The dollar amount of the gold liquidation was very small, it was just a lot of contracts."

According to the Journal, gold's troubles over the last several weeks led to a 70% loss for SHK. But Shak said the big drop wasn't the reason he's closing his fund.

"I just chose to close," he said. "I didn't like my positions so I chose to close; I wasn't forced. I was in the process of closing anyway."

Still, Shak admitted, "down 70% is better than down 100%," and noted that Comex's continuing increases in his margin requirements were a factor. Last Monday, Comex raised his margin requirements by 25%.

Shak also denied that his decision last week to list his Manhattan apartment had anything to do with his losses. And he said he would begin trading again in a few weeks, although he did not say that he would begin managing outside money once again.


In Depth

Q&A: Executive Recruiter Talks Hedge Fund Closures, Hiring Trends

Dec 19 2014 | 6:58am ET

This year, hedge funds have been closing at a rate not seen since the financial...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Alternative Investment Funds Face A Communications Imperative

Dec 19 2014 | 6:10am ET

A handful of the top alternative investment firms on both sides of the Atlantic...

 

Sponsored Content

Hard Assets Trending

Futures Trending

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.