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Ospraie Hedge Fund Pressuring Commodities - Mike Swanson (09/04/08)

Submitted by Mike Swanson on Thu, 2008-09-04 07:12.

A US hedge fund, the Ospraie Fund, has partly been responsible for the selling pressure in commodity stocks in the first few days of September. The fund is part owned by Lehman Brothers and had assets of $2.8 billion in the beginning of August. The fund lost 26.7% in August and sent a letter to investors saying that it was going to shut down.

Specializing in commodities the fund will have to sell billions of dollars worth of commodity stocks to liquidate. The fund plans to return a portion of its assets to investors at the end of September and the rest at the end of the year. It is likely that some have been front running the fund by short selling commodity stocks ahead of its need to sell. At its size its is one of the biggest hedge fund blow ups in the industry, but I wouldn't expect it to pressure commodities for weeks on end. Usually the impact on these things is short lived - and indeed may already have been seen - due to front running. But regardless might be best to hold off on gold stocks and future stock picks in the next few days.

For more go to Ospraie hedge fund blow up.

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