The Red Kite Markets Fund, RK Capital's largest, fell as much as 40% in August
According to an article that was recently published on Bloomberg (link below), RK Capital Management's various funds fell as much as 30% in August, mainly due to a rapid drop in the price of aluminum and copper. This isn't the first hedge fund that has been stung from the sudden and rapid decline in commodities prices, and it certainly won't be the last. Many funds raked in the money when the price of oil, gold and practically everything else skyrocketed over the past few years, and now a number of funds are starting to publicly feel the effects of the market going the other way.
RK Capital Management LLP, which was founded in 2005 by Michael Farmer, David Lilley and Oskar Lewnowski, had a banner year in 2006 that saw the value of their funds almost triple. According to the Bloomberg article, RK Capital currently has five different funds whose performances have cooled considerably since 2006. 2007 was apparently a particularly rocky year for the funds, and 2008 has not been overly profitable as well. After the recent August decline, RK Capital's five hedge funds under management are currently up approximately 2% YTD, according to a source from the Bloomberg article.
The firm's biggest fund, Red Kite Metals, suffered the biggest loss in August. According to the article, the fund lost 40% of its value in August, and is now currently down around 7% on the year.
Michael Farmer, one of the firm's co-founders, worked at Philipp Brothers before starting his own firm, Metal + Commodity, which was a unit of Metallgesellschaft AG.
This isn't the first commodities hedge fund that has suffered major losses as of late, and it certainly won't be the last. Will investors at these hedge funds continue to absorb the massive volatility and stick around past redemption time, or will they move to the next hot sector?
Source: RK Capital Hedge Funds Lost Up to 30% in August as Metals Fell
Filed under: Hedge Fund News | The Economic Meltdown | General Market News