Ospraie’s Anderson Said to Start Hedge Funds With $100 Million

Date: Tuesday, July 7, 2009
Author: Katherine Burton, Bloomberg

Dwight Anderson, the commodities investor who liquidated his Ospraie Fund last year after a 39 percent loss, started two hedge funds this month with about $100 million, according to two people familiar with his firm.

Ospraie Equity Fund buys shares of commodity producers and companies in industries such as chemicals, mining and paper, said the people, who asked not to be identified because the information is private. Ospraie Commodity Fund invests in commodities and related derivatives.

Investing opportunities are “as compelling as I have seen in my 15-plus years of investing,” Anderson wrote in a May letter to investors when he announced the funds. Oil has gained 44 percent this year, while nickel is up 39 percent and zinc has gained 29 percent.

Anderson’s New York-based Ospraie Management LLC began raising money for the funds and separate accounts in May, and he and employees are among the investors. Jonathan Gasthalter, a spokesman for Ospraie Management, declined to comment.

Ospraie Fund, the world’s largest commodities hedge fund at its peak, had more than $3.5 billion in assets after averaging annual gains of 15 percent from 2000 through 2007. Anderson decided in September to shut the fund and sell assets after losses of more than 30 percent triggered a clause enabling investors to exit.

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

Ospraie Fund clients who invest in either of the new funds before the end of this year will pay no incentive fee until their 2008 loss is recouped. Alternatively, they can pay fees of 1 percent of assets and 10 percent of any investment gains for as long as they are in the funds. The industry standard is a 2 percent management fee and 20 percent of gains.

In Anderson’s previous fund, investors agreed not to exit for three to five years. They can withdraw money quarterly from his new funds.

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