BlueGold Down 34% As Investors Fret About Stock Move

Dec 23 2011 | 10:10am ET

BlueGold Asset Management's obituary has been written before, only to prove premature. But the hedge fund is stumbling towards its first annual loss as investors worry about a change in the oil specialist's strategy.

London-based BlueGold is down 34% through mid-December, Reuters reports. Assets under management have fallen by some 40%, to US$1.2 billion from about US$2 billion.

BlueGold's losses this year have been steady; the firm was down about 25% through August.

But more worrying to some investors is not the firm's losses, but its portfolio. The firm's exposure to equities has risen to half of its assets, up from 5% at the beginning of the year. About 15% of BlueGold's exposure is to macro hedges, according to its latest risk portfolio.

"They are just not qualified to put on these kind of hedges," one investor told Reuters. "It's something that's worrying us. And from what we know, it's also worrying others who are invested with them."

Another source who works with that investor added, "We've no idea what specific trades they've been doing on equities or the macro side. We don't know the pluses and negatives of those trades, either. What we know is they've fallen deeper into the red and that's not comforting."

BlueGold founders Pierre Andurand and Dennis Crema made their name at Vitol trading oil.

"I always worry when any manager changes their stripes or tries to add a new strategy or even just a twist," another BlueGold investor told Reuters. "It doesn't mean they can't pull it off swimmingly, but more often than not, they don't."

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