Hedge fund supervisor Pierre Andurand has emerged as one of many early winners from the massive commodity market rebound, drumming up returns of just about 15 per cent because the begin of the 12 months due to bets on rising oil and European carbon costs.
The French oil specialist, who returned traders as a lot as 152 per cent in 2020 betting on the coronavirus-driven collapse in crude, has now taken to betting on oil’s restoration.
Andurand Capital Administration’s primary fund was up 14.8 per cent as of March 5, in accordance with individuals accustomed to its efficiency, whereas its Discretionary Enhanced fund, which may at occasions take extra danger, was up by an identical quantity. Mixed the 2 funds have about $700m in property below administration.
Oil and different commodities have prolonged a rally initially of 2021 as traders wager uncooked materials markets will strengthen because the world economic system begins to rebound from the depths of the coronavirus pandemic.
Brent crude, which has additionally been boosted by massive cuts to produce by Opec and its allies, hit a 14-month excessive above $70 a barrel this week.
Whereas the fund declined to touch upon its returns, Andurand advised the Monetary Occasions that he noticed additional good points for oil this 12 months, with Opec members indicating they’re in little rush to extend manufacturing.
Andurand mentioned the Opec+ group, which has been proscribing output because the spring final 12 months, was seemingly underestimating how rapidly demand would rebound as vaccines are rolled out in wealthier nations and journey restrictions ease.
“The oil worth firmly is within the palms of Opec this 12 months,” Andurand mentioned. “We’ll in all probability see $80 someday as demand is prone to shock to the upside within the second half of the 12 months and the market will beg for further manufacturing.”
Whereas Andurand has a repute for making large bets on the oil worth, a big a part of his returns in 2021 are additionally coming from European carbon allowances.
The European carbon market, which is designed to chop CO2 emissions by placing a worth on air pollution, has soared greater than 70 per cent prior to now 4 months, hitting a document excessive above €41 a tonne on Wednesday.
The fund supervisor, who revealed final 12 months that he was dipping a toe into the carbon market, diverted a much bigger portion of his fund to carbon in 2021, betting costs will rise much further, in accordance with an individual accustomed to the matter.
Late final 12 months the European Fee pledged to cut back carbon emissions by 55 per cent by 2030, up from a goal of 40 per cent beforehand.
European carbon costs nonetheless have “a protracted option to go”, Andurand advised the FT. One in all Andurand Capital’s analysts advised Bloomberg in February that the fund believed the EU carbon worth would finally rise to about €100 a tonne, a stage that will make different fuels like hydrogen produced from renewable vitality sources aggressive.
The EU carbon market is seen as a key tool for lowering emissions within the bloc, with the variety of allowances accessible to utilities and business anticipated to tighten over time.