Hedge Fund Manager Cashes in on Oil Crash

Andurand Capital bet on the collapse in 2014 oil prices.

Energy hedge fund Andurand Capital returned 38 percent in 2014 betting on the collapse in oil prices, a source familiar with the matter said on Tuesday, emerging as one of the biggest winners from the near halving in crude since June.

French fund manager Pierre Andurand, who made his name in 2008 by calling the sharp rise and subsequent collapse in oil prices that year at his BlueGold fund, launched Andurand Capital in 2013.

The London-based fund had $400 million of assets under management at the start of this year, the source said. The return of 37.9 percent was net of all management and performance fees. Returns not including performance fees were 47.4 percent.

Most of the returns came in the last two months of the year, as Andurand bet on the sharp drop in crude prices accelerating.

The fund was up only slightly for the year at the end of October, when Andurand predicted at London's Oil & Money conference that the market could drop to $50 a barrel -- well below the roughly $85 a barrel North Sea Brent was trading at the time.

Brent hit a 5-1/2 year low of $51.23 a barrel on Tuesday, down by more than 50 percent from the 2014 high near $115 a barrel.

Speaking in December, Andurand said wild price swings would continue after the Organization of the Petroleum Exporting Countries (OPEC) declined to cut production, choosing to compete to hold on to market share rather than trying to prop up the price.

"There needs to be real pain in the oil market before the price can go back up," Andurand said in December, predicting a number of high-cost producers would go bankrupt before the U.S.-led surge in shale supplies slowed enough to balance the market. Andurand Capital declined to comment on Tuesday.
 

By David Sheppard