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Up to 10 European hedge funds have suspended redemptions after investors clamoured for their cash when the managers made severe losses.

Funds with heavy losses reportedly include Corin, Phylon, Addax FX1, Henderson Global Currency, Odey Treasury, Sector ERV, Kinetic Special Situations, Systeia Alternative Risk Trading and Polar Technology, according to Eurohedge, which monitors the industry

lateStarter wrote:My only question is how many of these:

Funds with heavy losses reportedly include Corin, Phylon, Addax FX1, Henderson Global Currency, Odey Treasury, Sector ERV, Kinetic Special Situations, Systeia Alternative Risk Trading and Polar Technology, according to Eurohedge, which monitors the industry

are UK specific as opposed to 'Europe'?

Energy Hedge Funds Missing Oil Boom Returns Lag Even as Futures Prices Soar,
Undermining Fears of Speculators' Clout By GREGORY ZUCKERMAN and ERIC BAUM, 9 Jun 2008:
If speculators are responsible for driving up energy prices, some of them haven't been doing a good job of profiting from the surge.

Hedge funds that focus on energy failed to cash in on huge moves in oil, natural gas, coal and other parts of the energy patch this year. Some were too cautious, bet against crude oil to protect other holdings or bought stocks of oil refiners and producers, many of which have struggled. Exxon Mobil Corp., for example, is down more than 7% this year.

Hedge funds generally take both bullish and bearish stances on an investment sector, so they don't usually keep up when a market soars.

Some of the hedge funds having difficulties may have been among those that bet against the price of long-term oil-futures contracts, while at the same time buying near-term oil futures, says Mary Ann Bartels, an analyst at Merrill Lynch. That strategy backfired in recent weeks when long-term energy-futures prices did better than near-term prices.

The strength in crude this year has caught some veteran traders by surprise, in part because oil inventories have been relatively full. "People seemed to get too scared when it neared $100 a barrel that a pullback was possible and have been gun shy getting back in ever since," said one hedge-fund manager.

Hedge funds that focus on energy failed to cash in on huge moves in oil, natural gas, coal and other parts of the energy patch this year. Some were too cautious, bet against crude oil to protect other holdings or bought stocks of oil refiners and producers, many of which have struggled. Exxon Mobil Corp., for example, is down more than 7% this year.

Hedge funds generally take both bullish and bearish stances on an investment sector, so they don't usually keep up when a market soars.

Some of the hedge funds having difficulties may have been among those that bet against the price of long-term oil-futures contracts, while at the same time buying near-term oil futures, says Mary Ann Bartels, an analyst at Merrill Lynch. That strategy backfired in recent weeks when long-term energy-futures prices did better than near-term prices.

OilFinder2 wrote:Ummmm . . . some people aren't reading very carefully. The article isn't saying that hedge funds didn't invest in oil, it just says that many didn't make money doing so.

Hedge funds that focus on energy failed to cash in on huge moves in oil, natural gas, coal and other parts of the energy patch this year. Some were too cautious, bet against crude oil to protect other holdings or bought stocks of oil refiners and producers, many of which have struggled. Exxon Mobil Corp., for example, is down more than 7% this year.

Hedge funds generally take both bullish and bearish stances on an investment sector, so they don't usually keep up when a market soars.

Some of the hedge funds having difficulties may have been among those that bet against the price of long-term oil-futures contracts, while at the same time buying near-term oil futures, says Mary Ann Bartels, an analyst at Merrill Lynch. That strategy backfired in recent weeks when long-term energy-futures prices did better than near-term prices.

OilFinder2 wrote:Ummmm . . . some people aren't reading very carefully. The article isn't saying that hedge funds didn't invest in oil, it just says that many didn't make money doing so.

americandream wrote:I think the inference in this thread and its WSJ link was that they (hedge funds in case u think I'm talking about little green men) weren't the investment drivers behind the oil price hike...talk about bein a dimwit!

Now the Wall Street Journal says that hedge funds weren't investing in oil futures contracts

If speculators are responsible for driving up energy prices, some of them haven't been doing a good job of profiting from the surge.

Hedge funds that focus on energy failed to cash in on huge moves in oil, natural gas, coal and other parts of the energy patch this year. Some were too cautious, bet against crude oil to protect other holdings or bought stocks of oil refiners and producers, many of which have struggled. Exxon Mobil Corp., for example, is down more than 7% this year.

The 97 hedge funds that focus on energy investments were up an average ...

OilFinder2 wrote:

americandream wrote:I think the inference in this thread and its WSJ link was that they (hedge funds in case u think I'm talking about little green men) weren't the investment drivers behind the oil price hike...talk about bein a dimwit!

Dante's Peak said:

Now the Wall Street Journal says that hedge funds weren't investing in oil futures contracts

But that's not what the article said. The article is hidden behind a subscription wall, so I can't read the entire thing. Here is the teaser:

If speculators are responsible for driving up energy prices, some of them haven't been doing a good job of profiting from the surge.

Hedge funds that focus on energy failed to cash in on huge moves in oil, natural gas, coal and other parts of the energy patch this year. Some were too cautious, bet against crude oil to protect other holdings or bought stocks of oil refiners and producers, many of which have struggled. Exxon Mobil Corp., for example, is down more than 7% this year.

The 97 hedge funds that focus on energy investments were up an average ...

Notice that it says "some" of these hedge funds haven't been doing a good job about profiting from the surge in oil prices. Based on the teaser, and based on the excerpt Dante posted, it says absolutely nothing to the effect that no hedge funds have been investing in oil futures contracts.

DantesPeak wrote:What say you - all of you who have constantly stated that hedge funds were pushing prices higher?

"You have asked the question 'Are Institutional Investors contributing to food and energy price inflation?' And my unequivocal answer is 'YES.' In this testimony I will explain that Institutional Investors are one of, if not the primary, factors affecting commodities prices today. Clearly, there are many factors that contribute to price determination in the commodities markets; I am here to expose a fast-growing yet virtually unnoticed factor, and one that presents a problem that can be expediently corrected through legislative policy action."
"What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets: Institutional Investors. Specifically, these are Corporate and Government Pension Funds, Sovereign Wealth Funds, University Endowments and other Institutional Investors. Collectively, these investors now account on average for a larger share of outstanding commodities futures contracts than any other market participant.
"These parties, who I call Index Speculators, allocate a portion of their portfolios to "investments" in the commodities futures market, and behave very differently from the traditional speculators that have always existed in this marketplace. I refer to them as "Index" Speculators because of their investing strategy: they distribute their allocation of dollars across the 25 key commodities futures according to the popular indices - the Standard & Poors - Goldman Sachs Commodity Index and the Dow Jones - AIG Commodity Index."
Why would an investor want exposure to a long-only index of commodities? Perhaps for portfolio diversification, as commodities are uncorrelated with the rest of the portfolio, or as a way to play the growing demand for commodities of all sorts from emerging markets, as a hedge against inflation, and so on. Mainline investment consultants began to suggest a few years ago to their clients that they get into the commodity market on a buy and hold basis, just like they do with stocks and bonds.
And they have done so in a very large way. As the chart below shows, at the end of 2003 there was $13 billion in commodity index funds. By March of this year, that amount had grown 20 times, to $260 billion. Masters also shows that this corresponds with the stratospheric rise in commodity prices. In many commodity futures markets, index speculators are now the single largest participant.

You called? I answer. Index speculators have been pumping up the price of oil. Check out this graph of the increasing amounts of index investment money pouring into commodities

mefistofeles wrote:A few hundred billion in the commodities markets. I think you're really looking at comparatively minimal inflows.
Look at the mortgage markets:
FHLB Bank loan to Countrywide.
So what you're saying is that between Microsoft's take over bid for Yahoo and single loan to FHLB Bank loan to Countrywide you have 40% of the commodities market covered. If anything the commodities market is dwarfed by much larger capital market. The market for mortgage backed securities is roughly 6.1 trillon or about 17.4 times as large the total commodities index.
Then of course you have foreign central banks holding Four Trillion Dollars worth of reserves.
Is there a bubble maybe, but there is ALOT of hot money in the world only a small fraction has gone into the commodities markets. Compared to other financial markets and what foreign central banks are holding the commodities market are comparatively undercapitalized, considering how important commodities are.

kublikhan wrote:I got some volume data on ICE, both future contracts and OTC. The OTC data is imprecise because it is tracking commissions not contracts, and because it is not tracking Brent specifically, but it should give us a general idea of what kind of traffic they are experiencing.

ICE Brent Crude futures contract(does not include WTI or gas):
May 2005: 78,996
May 2006: 113,931
Febuary 2007: 214,566
March 2007: 235,467
April 2007: 214,855
February 2008: 258,784
March 2008: 283,890
April 2008: 259,242
May 2008: 304,656

ICE OTC average daily commissions:
April 2004: $140,619
April 2005: $275,649
April 2006: $483,343
April 2007: $747,787
April 2008: $1,268,742

mefistofeles wrote:I think the key to stopping this tide of inflation would be super high interest rates. We need 12-14% rates here in the US. People need to save, conversely we need extreme fiscal discipline in order to insure that Congress doesn't bankrupt the US during such a high interest rate period.

Of course some would argue that sort of cure would be far worse than the disease,maybe. But the situation in the world is extreme and drastic steps need to be taken in order to take the wind of the economy and create a nice 30's style depression to contain the situation.