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Chicago based Hedge fund Citadel has made massive profits on it's commodity investments in 2020, over $1 billion according to Reuters.  Much of the gains were in oil and gas from the price swoons from the Covid demand meltdown, Large gains were also said to be have made in agriculture commodities.


Reuters reported last week that Citadel's hedge fund ’s investments in commodities returned more than $1 billion this year citing three people familiar with the matter, helping to drive strong overall performance for one of the world’s largest funds.

Citadel known for its size and profit swings is led by Chicago billionaire Ken Griffin. The fund benefited from gains across the commodities spectrum with energy the stand out in oil, power and natural gas.  Agriculture markets this year have also been a winner for them, the sources told Reuters.

Citadel’s flagship Wellington fund, which practices a multi-strategy array of investments on stocks, bonds, commodities and other securities using teams of traders, is up by 21.2% this year through November, putting it on track to have its best year since 2012, one person familiar with the matter said. - Reuters

Trends in selected commodity markets

The energy price index advanced by around 6.4% m-o-m in November, led by rising crude oil and coal prices, while natural gas prices were mixed. The index was down by 32.9% in the January-to-November period, compared to the same period of 2019.

The non-energy index rose m-o-m by 4.4%, with the base metals and agriculture indexes rising by 6.0% and 4.1%, respectively. The non-energy index was up by 1.7% in the first 11 months of 2020 compared to the same period last year.

Commodity Prices Dec 2020 OPEC

Energy markets swung wildly this year as the coronavirus pandemic crushed global fuel demand. WTI famously traded near minus $40 ahead of settlement as holders didn't roll in time, Bank of China customers said to be caught holding much longer positions than the bank had notified NYMEX/CME. USO rolls also fed the panic lower. From that point we rallied all hear to over $47. A move of near $100.  Hedge funds and astute merchants were able to take advantage of the opportunity. Oil traders such as Vitol were said to have made massive windfalls on the move.

The HFRI Fund Weighted Composite Index  tracks the performance of the global hedge fund industry gained 6.2% in November, the strongest monthly gain since December 1999, and is up 7.3% year-to-date Reuters said,

Citadel has moved to take a bigger interest in the commodity space. The fund had about $35 billion in assets under management as of Oct. 1 made a number of new hires.

They hired a former Glencore energy derivatives trader to head its first commodities trading team in Asia, and recruited former Morgan Stanley commodities trading chief Jay Rubenstein. The fund also hired Eike Schick, former head of the European natural gas desk at Freepoint Commodities, as a portfolio manager in London, and Mark Tawney, who ran Munich Re Trading, joined the company to lead a weather derivatives team earlier this year. - Reuters

All in all a stro ng few years for the fund. Last year, Citadel’s commodities business was up by at least $1 billion, boosted by strong gains in European natural gas and power trading.

Source: Reuters

From The TradersCommunity Research Desk

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