After posting more than two years of investment losses, Clive Capital LLP, the $1 billion commodity hedge-fund firm founded by Chris Levett, has decided to close its operations. A letter to clients has been sent about the decision that the London-based hedge fund will be shutting down its operations at the end of the month.
Started Well but Failed Due to Somber Market
Coming to existence in 2007, Clive Capital LLP was formed by Levett who left his posh job with Louis Bacon’s Moore Capital Management LLC and ventured into hedge fund management. According to observers this hedge fund company has been impacted a lot by price swings in markets after 2011.
During the early 2000s, commodities market was doing the best as there was a huge demand from China; however, later in the same decade it burst and caused losses to investors and traders. Founded in the middle of the boom, Clive Capital was a high-flying hedge fund which traded across a variety of commodities including oil, gas, copper, tin and lead.
Clive Capital LLP incurred huge losses and ended 2012 with $1.95 billion under management which was a 46 percent drop from 2011. The company which managed as much as $5.1 billion in May 2011 and would charge clients a 2.5% fee to oversee assets and 25% of any investment gains, had to reduce fees for its Class B shares so that it can bring them in line with the industry standard of charging a 2% management fee and a 20% performance fee.
In his letter to clients, Chris Levett said that he perceives there to be limited, suitable opportunities at this point in the economic-demand and the commodity-supply cycles. He admitted that it is also unclear as to when a heightened opportunity environment will return in commodities.
Clive Capital LLP is Not Alone
Clive Capital is not the only hedge fund company that has decided to shut its operations due to huge losses, BlueGold Capita, the $1bn (£650m) fund, founded by oil trading stars Pierre Andurand and Dennis Crema, too faced a similar fate. BlueGold Capital Management LLP was liquidated in April 2012 after losing 34% in 2011.
Similarly, Fortress Investment Group LLC (FIG) too had to shut a $500 million commodities fund when it incurred losses of 13% in four months.
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