Notorious oil trader Andy Hall is facing a rough time with oil prices slump. According to various reports, citing Astenbeck Capital Management‘s letter to shareholders, the hedge fund lost around 16.6% in July. Following the decline, the value of Astenbeck’s assets declined by $500 million to some $2.8 billion. The fund has been losing money for the last couple of months, reporting a negative return of 3.3% in June. For the first six months, Astenbeck posted gains of around 1.9%.
According to Astenbeck’s 13F filing for the first quarter of 2015, the hedge fund has an equity portfolio valued at $444.53 million, up from $103.51 million a year earlier. Not surprisingly, 98% of the fund’s equity portfolio are represented by positions in energy companies. At Insider Monkey, we analyze the returns of hedge funds’ equity portfolios by computing the weighted average returns of holdings in companies with a market cap above $1.0 billion. For Astenbeck, its holdings as of the end of March, posted a negative return of 2.4% during the second quarter.
Hall also considerably reshuffled his equity portfolio during the first quarter and boosted his positions in most stocks and closed stakes in six companies. Astenbeck’s top positions are represented by EOG Resources Inc (NYSE:EOG), ConocoPhillips (NYSE:COP), and Anadarko Petroleum Corporation (NYSE:APC). The fund held 717,160 shares of EOG, up by around 400% on the quarter, while in ConocoPhillips and Anadarko it disclosed ownership of 736,040 shares and 546,040 shares respectively.
Hall co-founded Astenbeck together with Occidental Petroleum Corporation in 2010. Currently he owns around 80% of the fund and Occidental holds the remaining 20%. Prior to founding Astenbeck, Hall worked as an oil trader at Citigroup and was involved in a controversy regarding his $100 million paycheck in 2009 during the financial crisis.
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It’s hard to predict what Hall will do in the near future with oil prices recently hitting multi-month lows and a recovery not even on the horizon. Bullish traders were hoping that the dip would be followed by a quick recovery, but are now reviewing their expectations. However, the prices seem to be stabilizing at the current levels and oil companies have been undertaking cost-cutting measures in order to keep shareholders interested. The energy sector has gained around 6% since the beginning of the year. The S&P GSCI Commodity-Indexed Trust (GSG) is down by 17% year-to-date.
The reason why we follow hedge funds’ activities and keep an eye on their returns as well is to compare their overall performance to the returns of a particular class of stock they invest in. The general opinion is that hedge funds as a group have been underperforming for a long time, but it’s only due to their large fees and poor performance of some of their investments in large-cap companies, which are generally more efficiently priced. However, when we looked at the most popular small-cap ideas of a group of some 700 investors, we determined that they actually beat the market in the past. Moreover, since August 2012, our portfolio of 15 top small-cap ideas of the hedge funds we track, managed to return 123%, beating Mr. Market by some 65 percentage points (read more details here).