US hedge fund makes $400m from natural gas price volatility

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Volatility in natural gas prices helped one US hedge fund bag profits of more than $400m in October alone.

Miami-based Statar Capital, which manages about $2bn in assets and is headed by Ron Ozer, a former trader at Citadel and DE Shaw, made about 23.5 per cent last month, said multiple people familiar with the performance.

The gains mark a bounceback after Statar suffered a loss of about $130m in the first two-and-a-half weeks of September.

Natural gas prices have rocketed this year as demand has rebounded and supply has proven strained, but the market has been choppier in recent weeks. UK gas prices, which were up more than 500 per cent for the year early last month, have fallen along with continental European prices during October, slipping about a quarter on signs Russia would increase exports again after restricting supplies to western Europe for months.

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US prices on commodity futures exchange Nymex, meanwhile, seesawed during October, surging to almost $6.40 per million British thermal units at one point before briefly falling below $5, only to rebound sharply again.

Statar was able to profit from market volatility, repeatedly using declines in short-term contracts as a chance to increase positions before taking profits during rebounds in price, said one person familiar with its positioning.

The gains, which equate to more than $400m of trading profit for October, make Statar one of the big hedge fund winners from a volatile month for some markets, during which bonds also experienced a large upheaval.

Statar is now up about 29 per cent this year, said a person who had seen the numbers. The firm declined to comment.

Statar was one of last year’s top-performing hedge funds, gaining 59 per cent, as a number of commodity funds, including Pierre Andurand’s Andurand Capital, profited from a collapse in oil and other commodity prices during the early stages of the coronavirus pandemic, and then from a subsequent rebound.

Commodity markets have been hard going for hedge funds over the past decade, as lengthy periods of declining prices have made it harder to make money, and a number of firms, including Armajaro Asset Management and Astenbeck Capital Management, have shut funds. However, Statar has previously said that this exodus of capital had helped create “the best opportunity set for natural gas trading in many years”.

Ozer previously focused on trading natural gas futures and options at DE Shaw before becoming head portfolio manager for US natural gas at Citadel, where he was promoted after his first year to report directly to billionaire founder Ken Griffin.

laurence.fletcher@ft.com

Additional reporting by David Sheppard



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