Latest news with #PierreAndurand
Yahoo
02-08-2025
- Business
- Yahoo
Andurand Pulls Back From Cocoa Misadventure After ‘Extreme' Volatility Drives Losses
(Bloomberg) -- Famed oil trader Pierre Andurand has pulled back from a bullish bet on cocoa after a series of mistimed trades led to deep losses, according to a letter sent to investors that was seen by Bloomberg. The World's Data Center Capital Has Residents Surrounded An Abandoned Art-Deco Landmark in Buffalo Awaits Revival We Should All Be Biking Along the Beach San Francisco in Talks With Vanderbilt for Downtown Campus Seeking Relief From Heat and Smog, Cities Follow the Wind The gyrations underscore the risk for fund managers that drift away from their core expertise into other markets that carry unfamiliar risks. Andurand, whose main fund was down over 57% through the end of June, began trading cocoa in early 2024 after more than a decade focused primarily on oil. 'Recent performance has been very disappointing,' the recent letter to investors said. 'Pierre Andurand has further reduced long cocoa exposure in all Andurand funds.' A spokesperson for Andurand declined to comment. Andurand's ill-fated foray into cocoa began in January 2024, when an analyst from his firm approached him and proposed a new trade. 'Pierre, you should look at cocoa,' the analyst said, according to a retelling by Andurand on the Odd Lots podcast in May last year. 'Okay, I don't know anything about it, tell me,' Andurand replied. Until that point, Andurand was primarily known for trading energy. He found initial success buying and selling oil at commodities trading house Vitol Group, before leaving to start hedge fund BlueGold Capital Management in 2008 with the firm's former head of trading Dennis Crema. Their new venture returned over 200% in its first year thanks to lucrative bets on the price of oil. BlueGold lasted only a few years, suffering steep losses and returning money to its investors in 2012. Andurand launched his eponymous firm the following year, making bets on oil that drove double-digit gains in its early years. Andurand branched out from oil to invest in other commodities, including metals. His firm also made profitable bets in recent years on a sharp rise in the price of European carbon allowances. Cocoa Strategy The cocoa-trading strategy suggested by the analyst at Andurand's firm was a basic story of a mismatch in supply and demand. A majority of the commodity is grown in just two countries, the Ivory Coast and Ghana. Supplies there looked set to decline for a variety of reasons, such as adverse weather conditions and a fungal disease called Black Pod. Any supply scarcity could have an outsized impact on cocoa futures, because typically demand for chocolate doesn't respond much to shifts in the price of the raw commodity, Andurand said. Chocolate consumption keeps rising 'when you have a recession or not, when prices go up a lot or not,' he said on Odd Lots. Initially, the analyst's assessment of the market proved to be correct. By the end of February 2024, cocoa futures were already up some 50% for the year. Andurand's firm initiated a small position in cocoa the following month, according to a letter sent to investors. By the end of 2024, bets on cocoa helped drive a 50% gain in his flagship Andurand Commodities Discretionary Enhanced Fund. Those profits were short-lived. The fund dropped some 17% in January 2025 and nearly 25% in February, with losses driven by falling cocoa prices due to worries about demand, according to information sent to investors. The less volatile Andurand Commodities Fund is also down 26% through June. In April, Andurand increased the fund's bullish cocoa position in expectation that figures on bean processing set to be published later that month would drive up prices. The prediction proved to be correct, but the trading strategy nevertheless foundered amid the chaos caused by Trump's so-called Liberation Day tariff announcement on April 2. As the US president launched his trade war, Andurand took a short position on the S&P 500 as a hedge against the risk that tariffs posed to the price of commodities. At first it worked, as stocks fell and cocoa rose, but the trend was quickly reversed when Trump announced a 90-day tariff pause. Amid the volatility, Andurand sought to stem losses by unwinding both positions. The bullish cocoa-bean processing data was eventually confirmed, but Andurand's fund missed out on the subsequent price rally and his fund slumped some 18% in April. 'In hindsight, if we had maintained the same positions throughout the month and not traded following Trump's various announcements, the funds could have generated positive performance,' Andurand explained to investors in a letter. 'At the time it was extremely difficult not to react to Trump's tariff announcement.' With Andurand's prediction of bullish cocoa-processing data vindicated, he put his bullish bet back on. 'Our top conviction today is that we will see higher cocoa prices,' according to the letter sent to investors that detailed April's performance. 'The majority of our risk remains in cocoa given our fundamentally bullish view.' While cocoa prices did rise again in May, they slumped in June and July, often with huge intraday swings, as a slowdown in demand from Europe's cocoa factories deepened. Unfamiliar Market Some of Andurand's losses may stem from fundamental differences in the market for cocoa and the much larger oil trade. Cocoa is a relatively small market, so if you make a big bet and the market moves against you there may not be enough buyers to shrink your exposure without drastically reducing prices, said Ole Gjolberg, a professor at the School of Economics and Business at the Norwegian University of Life Sciences. 'Cocoa is not like the markets that Andurand has been in before, like oil and gas and metals. So that's also part of the risk picture,' said Gjolberg, who teaches about hedging and speculation in commodities. 'If you're going in big you can be stuck with your positions.' It appears that Andurand has come to the same conclusion — even if his thesis is correct that there's a fundamental mismatch between the supply and demand of cocoa, that doesn't make it a profitable trade. 'We still believe in the constructive cocoa story,' a recent letter to investors said. 'But the price action and volatility has been too extreme.' --With assistance from Mumbi Gitau. How Podcast-Obsessed Tech Investors Made a New Media Industry Everyone Loves to Hate Wind Power. Scotland Found a Way to Make It Pay Off It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan Russia Builds a New Web Around Kremlin's Handpicked Super App Cage-Free Eggs Are Booming in the US, Despite Cost and Trump's Efforts ©2025 Bloomberg L.P. Sign in to access your portfolio
Bloomberg
02-08-2025
- Business
- Bloomberg
Andurand Pulls Back From Cocoa Misadventure After ‘Extreme' Volatility Drives Losses
Famed oil trader Pierre Andurand has pulled back from a bullish bet on cocoa after a series of mistimed trades led to deep losses, according to a letter sent to investors that was seen by Bloomberg. The gyrations underscore the risk for fund managers that drift away from their core expertise into other markets that carry unfamiliar risks. Andurand, whose main fund was down over 57% through the end of June, began trading cocoa in early 2024 after more than a decade focused primarily on oil.
Bloomberg
24-06-2025
- Business
- Bloomberg
Andurand Hedge Fund's Losses Worsen to 60% as Turmoil Spreads
Hedge fund manager Pierre Andurand's losing streak continued in June as geopolitical turbulence unsettled commodity markets. The Andurand Commodities Discretionary Enhanced fund slumped about 12.7% in the first three weeks of June, according to people with knowledge of the matter. That took losses this year to about 60%, the people said, asking not to be identified because the details are private.
Bloomberg
24-04-2025
- Business
- Bloomberg
Andurand Hedge Fund's Losses Worsen to 52% After April Turmoil
Hedge fund manager Pierre Andurand's losing streak continued well into April amid the turmoil sparked by US President Donald Trump's tariff barrage. His Andurand Commodities Discretionary Enhanced fund slumped about 19% in the first three weeks of April, according to people with knowledge of the matter. That took losses this year for the strategy to about 52%, the people said, asking not to be identified because the details are private.
Boston Globe
03-04-2025
- Business
- Boston Globe
Oil, metals, and crops hit as Trump's tariffs threaten demand and economy
Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up 'Assuming they stick, which is a big assumption, they will weigh on global economic growth and be inflationary,' said Pierre Andurand, who runs hedge fund Andurand Capital. 'For commodities it will be overall negative for global demand, particularly for commodities used to move things around: ie oil.' Advertisement Of particular concern in commodities markets will be the impact on China, the world's top buyer of many raw materials. The country has already imposed tariffs on US farm products and there's a risk the trade war could escalate. Canada and Mexico — key sources of crude for refiners in the Midwest and Gulf Coast — aren't subject to the latest fees for now. Advertisement 'The tariffs were bigger than expected,' said Giovanni Staunovo, a commodity analyst at UBS Group AG. 'The question now is how other nations will respond, including whether we will see stimulus measures.' Commodities were pressured despite a weaker dollar, something that normally makes them more attractive to investors holding other currencies. Energy Oil, natural gas and energy products are among exempted goods, the White House said, sparing the direct impact on fuel flows. Still, crude has been whipsawed by Trump's policy changes, tariffs and sanctions on Iran and Venezuela. With the levies threatening consumption, declines in refined fuel markets outpaced those in crude. 'The anticipated hit to demand because of tariffs also has a negative impact on crude, refined products and some extent natural gas demand, which is the main reason for the downward move on prices,' Rabobank strategist Florence Schmit said. 'There is more at stake than meets the eye here as the future of the US LNG industry still hinges on large off-take agreements with buyers in Europe in Asia, who were just hit by sweeping tariffs.' West Texas Intermediate crude came under added pressure as OPEC+ agreed to make a larger-than-expected oil supply hike in May, adding the equivalent of three monthly tranches from its previous plan to revive output. Metals Metals are being handled under a separate 'Section 232' tariff regime. Aluminum already has a blanket 25% fee on all US imports, while tariffs on copper are expected within weeks. Zinc, nickel, tin and a wide range of other commodities were also exempted from the country-specific tariffs, though they could be subject to Section 232 probes in future. Advertisement The threat of tariffs has caused major ructions in metals markets, with traders racing to ship billions of dollars of gold, silver and copper to the US before potential levies are imposed — and to take advantage of higher prices there. While Trump has said he wants to impose specific tariffs on copper, the worry in precious metals markets was that they'd be ensnared by broader tariffs on all incoming goods. On Wednesday, the White House clarified that gold, silver and platinum-group metals will be exempt from the new reciprocal levies, bringing the massive arbitrage trade to an abrupt halt. Crops China is a key market for soybeans. If there is retaliation, the US may struggle to move its products to Asia, which is a major market for American grain and oilseed exports, said Ole Houe, chief executive officer at Sydney-based Ikon Commodities. China and other parts of Asia are also home to some of the world's biggest cotton importers — which also export textiles back to the US. Trump exempted goods covered under the USMCA North American trade agreement, which could help maintain crop flows with key US trading partners Mexico and Canada. Canola futures jumped to the highest in almost a month. The advance hints that markets had been pricing in further import tariffs on Canadian goods, said CRM AgriCommodities consultant Mike Verdin. Trump Has Unveiled Reciprocal Tariffs. What Are They?: QuickTake
