CTA Hurt By Subprime Meltdown

Sep 10 2007 | 1:59pm ET

The subprime debacle is making its presence felt not only on Wall Street, but in the heartland as well. Lincoln, Neb.-based DEC Capital, a commodity trading advisor, suffered a 12.4% drawdown last month in its $18 million Commodity Alternatives program, leaving it down 2.32% year-to-date.

The agricultural futures trader cited problems in the housing and credit markets and implied volatility affecting its positions in soybeans futures. “August was another volatile month for traditional investments,” said the firm, in its latest monthly investor letter. 

“The problems in the housing and credit markets are well documented, with some worried that this is a tipping point for the U.S. economy. DEC's portfolio was affected by these outside developments—the subprime Wall Street volatility adversely affected our core length in soybeans futures and an expansion in implied volatility hurt our option premium positions.”

The firm also said favorable weather conditions coupled with “very efficient production of U.S. growers” and heightened biofuel demand for corn adversely affected its forecast for soybeans and feed grain. “DEC had built up an inter-market Kansas City vs. Chicago wheat strategy, but heightened volatility pushed it outside of DEC's risk parameters, which forced us to close it out at a loss.”


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

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.