Battered Aisling Battles To Stay Afloat

Jul 13 2012 | 12:23pm ET

Michael Coleman is candid about the chances his Aisling Analytics survives the currently brutal market for commodity hedge funds.

"We'll only know in hindsight" if holding on was the right thing to do, Coleman told Reuters. And even if he is able to turn things around at Aisling's Merchant Commodity Fund, which lost one-third of its value last year and is down again this year, Coleman's not sure it will be enough.

"We've never tried to convince anyone not to take their money out," he said. "But we do ask people whether they are redeeming because of us or the world." And the world seems to be conspiring against Singapore-based Aisling, Coleman said.

After Aisling, which once managed US$2.5 billion, saw US$500 million evaporate in the markets last year and another US$500 million yanked out by investors, leaving the firm with just US$500 million, Coleman gave up trading to focus on risk-management at the firm, leaving the former to Aisling co-founder Douglas King. It worked at first, with Merchant Commodity up 11% through April, but as with many commodity funds, May and June took their toll, leaving Merchant Commodity down 5% on the year.

And while performance has been bad, investor skittishness isn't helping. Coleman said that redemptions, which has slowed since January, are "not particularly a function of our performance but rather a function of investors themselves cutting back on risk."

Other commodity shops, including BlueGold Capital Management and Centaurus Capital Management—Fortress Investment Group also liquidated its commodity fund—Aisling plans to hold on. "We're not thinking about closing shop," Coleman said. It remains to be seen whether Aisling's investors have the same idea.

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