</>Doug Kass says that metals are getting schmeissed on rumors of a commodity-based hedge fund blowup.
Is this what he's talking about?
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By Alistair Barr, MarketWatch
Last Update: 6:13 PM ET Feb 1, 2007
SAN FRANCISCO (MarketWatch) -- Red Kite Management, a $1 billion metals trading hedge fund, wants to extend the notice period for investor redemptions after losses of as much as 15% in January, according to documents obtained by MarketWatch and people familiar with the firm's performance.
Red Kite, run by Michael Farmer, Oskar Lewnowski and David Lilley, asked investors in its metals fund to approve an amendment that would require 45 days notice before money can be withdrawn, according to a copy of a Jan. 31 letter from the firm. Previously, investors could redeem at the end of each quarter with 15 days' notice.
The change will mean that investors have to send redemption notices to Red Kite by Feb. 15 to get their money back at the end of the first quarter, the letter explained.
"Given the current size of the fund we believe that to maintain efficient operation it is necessary to increase the withdrawal notice period," the firm said.
Hedge funds sometimes extend redemption notice periods if they're expecting large investor withdrawals. By getting more advanced notice, funds have more time to sell positions and return investors' money in an orderly fashion.
It's not clear whether any Red Kite investors want to redeem. A representative at the firm's New York office declined to comment and said Lewnowski wasn't available to comment.
Red Kite has made millions of dollars betting on the price of metals such as copper since it was founded in January 2005. Last year, returns generated by the firm's Compass fund topped 90%.
However, after hitting highs in December, copper prices have slumped more than 20%. Copper for March delivery traded as high as $3.29 a pound intraday in December, then fell as low as $2.48 in January. It's now trading around $2.53 a pound.
Red Kite lost as much as 15% in January, according to three people familiar with the firm's performance. Losses exceeded 2% in December, according to a performance update from Red Kite's Compass fund that was obtained by MarketWatch.
Red Kite partner Lilley told reporters at a commodities conference in Shanghai last week that copper prices had fallen further than he'd expected, suggesting it was a good time to buy the metal. End of StoryBy Alistair Barr, MarketWatch
Last Update: 6:13 PM ET Feb 1, 2007 |
