MotherRock LP, the hedge fund firm run by former Nymex President Robert ``Bo'' Collins, is preparing to shut down because of ``terrible performance'' as natural gas plunged this year.
``We are in the process of developing a detailed plan for winding down the fund,'' Collins said in a letter sent today to investors in his MotherRock Energy Master Fund. MotherRock, begun in December 2004, invests in gas futures, seeking to exploit price differences based on the delivery month for the contracts.
``The volatility in these markets is very large,'' said Craig Pirrong, director of energy markets at the University of Houston's Global Energy Management Institute. ``That means the prospects for large profits are there, but the prospects for large losses are there too.''
MotherRock had ``significant losses'' in July, though a final tally was not yet available, Collins said in the letter, obtained by Bloomberg News. The timing of the shutdown has not been established, according to the letter.
In the first half of this year, MotherRock lost more than 23 percent, with most of the damage coming in June. The fund returned 20 percent to investors net of fees last year.
MotherRock had more than $400 million in customer funds earlier this year. A phone call to Collins was not immediately returned.
bloomberg.com
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Having gained 17% last week, natural gas futures on the New York Mercantile Exchange surged 14% on Monday, ahead of the onset of brutal heat in the Northeast and Midwest. |
