Ospraie’s Anderson to Give Commodities Hedge Funds Another Try

Date: Wednesday, May 13, 2009
Author: Katherine Burton, Bloomberg

Dwight Anderson, the commodities investor who liquidated his main Ospraie Fund last year after losing 39 percent, is planning a comeback with two new hedge funds set to open July 1.

The Ospraie Equity Fund will buy and sell stocks of commodity and basic-materials companies in industries such as chemicals, mining, paper and natural resources, Anderson said in a May 12 letter to investors. The Ospraie Commodity Fund will invest in commodities and related derivatives, according to the letter, a copy of which was obtained by Bloomberg News.

“After much reflection and with a number of lessons learned, we see a set of opportunities today that we believe could create significant value for investors in the coming years,” the New York-based manager wrote. “That opportunity set is as compelling as I have seen in my 15 plus years of investing in the basic industry space.”

Anderson’s former fund invested in commodities and related stocks. It was the world’s largest such hedge fund at its peak, with more than $3.5 billion in assets after averaging annual gains of about 15 percent from 2000 through 2007. He decided in September to shutter the eight-year-old fund and sell assets after losses of more than 30 percent triggered a clause enabling investors to withdraw their money by the month’s end. About 1,441 funds, or 15 percent of those worldwide, closed last year, according to Chicago-based Hedge Fund Research Inc.

Ospraie’s clients have gotten 82 percent of their money back. The remaining portion, invested in private companies, might take as long as three years to return, Anderson told investors at the time of the closure. Anderson also runs a $1 billion Special Opportunities Fund, which holds private-equity stakes.

Fee Discount

Jonathan Gasthalter, a spokesman for Ospraie Management LLC, declined to comment.

Ospraie Fund clients who invest in either new fund will pay reduced fees of 1 percent of assets and 10 percent of any gain, the letter said. Funds typically charge 2 percent of assets and 20 percent of gains.

Unlike Anderson’s previous offering, which normally locked up investors for three to five years, the new funds will allow them to exit quarterly. Assets will be capped, the letter said, without providing details.

The Hedge Fund Research Energy/Basic Materials Index jumped 13 percent this year through April 30. The Reuters/Jefferies CRB Index of commodity-futures prices climbed 6 percent this year through yesterday.

Personal Investment

Anderson, 42, said in the letter that he and his partners will invest “significant capital” in both funds. Anderson also said he recently repurchased the 20 percent stake in Ospraie Management that now-bankrupt Lehman Brothers Holdings Inc. bought from him in 2005.

Anderson graduated from Princeton University with a degree in history and earned a master’s in business administration at the University of North Carolina at Chapel Hill. He joined Julian Robertson’s Tiger Management LLC in 1994 and soon took over the New York-based hedge fund’s basic-industries group.

He moved to Tudor Investment Corp., the Greenwich, Connecticut-based hedge-fund firm run by Paul Tudor Jones, five years later. Anderson started the Ospraie Fund, named for the marine bird of prey, the osprey, while at Tudor, and spun it out at the end of 2003.

To contact the reporter on this story: Katherine Burton in New York at kburton@bloomberg.net