Hedge Fund News Wrap: Week Ending 01/23/15

(Bloomberg News) – Hedge fund manager Zach Schreiber stood on stage at Avery Fisher Hall in New York eight months ago and made a bold prediction.

“We believe crude oil is going lower — much lower,” Schreiber, 42, told the audience of roughly 3,000 investors, including some of the biggest money managers in the industry. “If you are long, I’m sorry for you.” Then he showed a slide of a car stuffed with clowns.

Crude was trading at $99 a barrel that day, bolstered by speculation that Russia’s annexation of Crimea and incursions into Ukraine would crimp shipments. Prices crept up over the next weeks peaking in June at $107. Then, as Schreiber predicted, the dive began.

Oil fell more than 50 percent through the end of the year as global supplies piled up, helping Schreiber’s PointState Capital make about 27 percent for the year after fees. The New York-based investment firm’s profit was about $2 billion in 2014 with about half of that from the oil trade, according to people familiar with the matter, who asked not to be identified because the firm is private.

Read the entire article at Bloomberg News
More coverage: MarketWatch and BusinessInsider

Manager ‘Truly Sorry’ for Blowing Up Hedge Fund

(CNBC) – A hedge fund manager told clients he is “truly sorry” for losing virtually all their money.

Owen Li, the founder of Canarsie Capital in New York, said Tuesday he had lost all but $200,000 of the firm’s capital—down from the roughly $100 million it ran as of late March.

“I take responsibility for this terrible outcome,” Li wrote in a letter to investors, which was obtained by CNBC.com.

“My only hope is that you understand that I acted in an attempt—however misguided—to generate higher returns for the fund and its investors. But even so, I acted overzealously, causing you devastating losses for which there is no excuse,” he added.

Li is a former trader at Raj Rajaratnam’s Galleon Group, which collapsed amid insider trading charges. Rajaratnam is now in prison for the illegal activity, but Li was never accused of wrongdoing.

Read the entire article at CNBC
More coverage: ValueWalk and The Wall Street Journal

Danish Crown Slips as Investors Gear for Second Rate Cut in a Week

(Reuters) – The Danish crown eased against the euro on Thursday, as investors positioned for a second interest rate cut this week from Denmark’s central bank as it steps up its fight to ward off upward pressure on the currency.

Danish monetary policy moves in sync with the European Central Bank. The ECB is likely to announce a quantitative easing programme later on Thursday, which in turn could prompt Denmark’s central bank to cut the deposit rate by 10 basis points and take it deeper into negative territory of -0.30 percent.

In early London trade, the Danish crown slipped to 7.4375 crowns per euro, having hit 7.43 crowns per euro on Monday, it highest since mid-2012, when markets were betting Greece would leave the euro.

“Investors are alert for a possible rate cut in Denmark,” said Niels Christensen, FX strategist at Nordea, Copenhagen. “A lot depends on how the euro will react to the ECB action and how much upward pressure is exerted on the Danish crown.”

Denmark is the sole remaining member of the ERM2 European exchange rate mechanism, in which a number of EU countries once kept their currencies within bands against the euro. Under the Danish peg, the crown can fluctuate by up to 2.25 percent around a central exchange rate of 7.46038.

Read the entire article at Reuters
More coverage: Bloomberg News and Financial Times