Natural gas hedge fund Statar Capital up 30pc this year
Natural gas hedge fund Statar Capital LLC, led by exCitadel trader Ron Ozer, has gained about 30% so far this year, thanks to profitable bets on U.S. natural gas volatility, a source familiar with the matter said. The fund had about $410 million in assets through November compared with about $200 million early this year, according to the source. The fund was up nearly 30% through November and about 42% since inception in September 2018.
Statar is one of the few remaining gas-focused hedge funds in the United States after a string of closures in recent years in part due to poor returns.
Velite Capital, once one of the most profitable U.S. gas funds, began winding down operations last year while others including Timoneer Energy, Madava Asset Management and Casement Capital have suspended operations.
"E&Ps are now producing and hedging more than they have historically, and since competition in providing liquidity has diminished, there is more edge in taking the other side of these trades," said Ozer, referring to exploration and production companies. He did not confirm the performance figures. A spokeswoman for the fund declined to comment. Statar profited from betting on U.S. natural gas implied volatility, a gauge of options demand, the source said.
Benchmark Henry Hub natural gas implied volatility NGATMIV hit a record high of 117.5% in November 2018 and a record low of 18.6% in April 2019. It climbed back to nearly 60% in late October.
U.S. natural gas production hit a record 83.80 billion cubic feet per day (bcfd) in 2018 and is expected to have surpassed that in 2019. The pace of growth is expected to slow in 2020, however.
British and Dutch gas prices, the benchmarks for Europe- wide gas sales as well as some liquefied natural gas (LNG) markets, hit 10- year lows this year, weighed down by an influx of supplies from Russia, the United States and others.
Hedge fund Citadel's commodities business is up at least $1 billion this year, driven by European gas trading, sources said.
Statar plans to expand further into European markets as global gas markets become more interlinked through increased LNG trade in coming years, the source said, adding the fund is still going to be predominantly U.S.-focused. The company also recently hired Xing Yuan as portfolio manager from Balyasny Asset Management.