Red Kite Soars As Copper Collapses

Oct 4 2011 | 12:44pm ET

As copper prices plummet, one hedge fund is belatedly celebrating its foresight.

The swoon in copper has pushed Red Kite Management's hedge funds up double-digits this year. The London-based commodities hedge fund's RK Metals flagship is up 45.6% this year through last week, while its longer-term RK Prospect fund is up 70%, the Financial Times reports.

Red Kite is the beneficiary of a bearish position it established last year. For most of its life, that investment has burned the firm, which saw the Metals fund lose 25.6% and the Prospect fund almost 40% last year. Indeed, copper's rally continued into February, when it reach an all-time high.

Since then, however, the collapse in copper prices that Red Kite bet on last year has come to pass. Copper is down by more than a third from its February peak.

"It's been quite a ride," a Red Kite investor told the FT. "You've had to have some balls to sit it out over the years."

Red Kite's bet against copper came after it warily eyed the growing stocks of the metal sitting in off-exchange warehouses in the world's largest copper producer, China.


In Depth

Q&A: Decathlon Capital On Revenue-Based Alternative Lending

Oct 30 2017 | 3:49pm ET

The explosion in private credit activity since the end of the financial crisis is...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Saxby: Not All EBITDA Is Created Equal

Nov 30 2017 | 8:02pm ET

Record levels of dry powder are driving competition among private equity firms to...