For the third year in a row, Astenbeck Capital Management has made a late rally to erase its year-to-date losses and is now poised to ensure that last year's slip was not the beginning of a streak.
The $4.8 billion commodity hedge fund, headed by former star Citigroup trader Andrew Hall, suffered its first-ever annual loss last year, when its late rally fizzled at the finish line. And it looked likely to suffer its second this year, when a 5% October drop left the fund down 2% on the year.
But Hall rallied last month, reversing October's loss, and heads into December up 3%, Reuters reports.
Hall credited his bets on crude oil and corn for the turnaround and dismissed the hullaballoo surrounding last month's U.S. presidential election and the impending "fiscal cliff."
"Notwithstanding all the media hoopla over the budget negotiations in Washington, the past month was fairly constructive for owners of risky assets—especially for the ones that we own," Hall wrote to investors. He said the firm had added an oil spread position that "currently has positive carry," and suggested, "if we do see a fourth straight year of disappointing production of corn, we think the mid-$8 [per bushel] levels seen earlier this year will be eclipsed."
Astenbeck is known for its volatility. This year, the fund has posted six positive months—but also suffered its second-worst month ever in May, when it lost 14.4% Indeed, Astenbeck lost ground every month between March and July. Last year, the firm bounced from up 18% in April to down more than 10% in August, was back up before an 18% drop in September left it down just 5% on the year. The hedge fund was back at break-even by October before ending the year down 3.8%.
In 2010, Hall managed to turn a 12% deficit at the beginning of September into a 12% return by New Year's Day.