Hedge Funds Betting on Commodities

With gold, copper and other precious metals reaching all or near-term highs, hedge funds are making their biggest bet in years that commodities will continue to rally.  According to Commodity Futures Trading Commission data, speculative bets on commodities reached the highest level since at least February 2006.

And, according to Barclay Capital, about 75 percent of respondents surveyed  last week in New York predicted a bigger inflow into direct commodity investments next year.

Metals Hedge Fund to Close

Apollo Management LP, a New York based hedge fund and private equity firm  closed its metals hedge fund in London.

The $40 million into the Apollo Metals Trading Fund started in March 2009, according to a U.S. Securities and Exchange Commission filing. An outside spokeswoman for the firm declined today to say why Apollo shut the fund or to give the number of fund employees.

Commodity hedge funds fell in the first half of 2010 amid sliding commodity prices.

Hedge Fund Gains From Cold Arctic Weather

Betting on Weather
Plenum Power Surge, a hedge fund based in Switzerland, is up 19% in just the first two month sof 2010 after betting on increasing power prices in Scandinavian countries.

The Plenum Power Surge fund manages almost $100 million in assets and has correctly predicted increasing prices after the coldest winter in Sweden in more than 20 years.

Henrik Wennberg, portfolio manager of the fund said, "...we were bullish on weather....and started buying then to take long positions."

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John Paulson Eying a Gold Price Spike

John Paulson, the hedge fund manager who made himself famous last year with his large bet against the subprime market, is now making another bet that doesn't bode well for a quick economic recovery.

Paulson & Co.paid $1.3 billion for a stake in AngloGold Ashanti, a South African gold miner. Paulson's subprime bets returned in excess of 100% in some cases. If gold were to rise an equivalent amount, it would likely be a sign of severe economic distress.

Of course, Paulson may be like many hedge fund managers: lucky enough to hit pay-dirt once, but not good enough to do it again and again. Time will tell, but if you want to place your eggs in the same basket with a guy who pretty much nailed the first half of the crisis I can't blame you.