Red Kite Management

[Dr Doom]

Launched Jan 2005, this article from April 2005 -

"Red Kite Management launched its Red Kite Fund with $25
million in January, and has since expanded the vehicle to
nearly $100 million. The fund invests in futures, options and
physical contracts involving copper, nickel, zinc, lead, tin
and aluminum, following a strategy that principals Michael
Farmer and David Lilley used to rack up average annual gross
returns of 48% at former employer MG Metal and Commodity.
The Red Kite fund is up 9% since inception.
Farmer and Lilley are based in London. Red Kite’s other
two principals, David Waite and Oskar Lewnowski, are stationed
in New York.
Farmer, who has more than 40 years of experience in
metal trading, got his start at Philipp Brothers in London. In
1990, he joined MG Metal, a London division of
Metallgesellschaft, to run the metal-trading business. That
operation went public in 2000 and was later purchased by
Enron, but then folded after the company’s collapse.
Lilley worked with Farmer at MG Metal, and with
Lewnowski at a metal-investment and trading outfit owned
by private equity firm Safeguard. Lewnowksi’s father, who
has the same name, owns hedge fund administrator Olympia
Capital.
Waite has been in the metal business for more than 30
years, during which time he separately headed units at Drexel
Burnham Lambert, PaineWebber and Rudolph Wolff. In 2000,
he set up his own consulting shop, Commodity Risk
Management Associates.
Red Kite selects its investments by combining a technical
trading approach with fundamental analysis of supply and
demand. Because the firm deals in physical contracts with
metal users and producers, it claims to have a better grasp on
the market than trading shops that deal only in futures ””
and thus communicate almost entirely with other traders.
Red Kite’s fund has a minimum investment requirement
of $500,000, with no lock-up period. Investors may withdraw
capital on a monthly basis. Fees are equal to 2% of
assets and 20% of profits.

 

[Dr Doom]

SAN FRANCISCO (MarketWatch) -- Red Kite Management, a $1 billion metals trading hedge fund, wants to extend the notice period for investor redemptions after losses of as much as 15% in January, according to documents obtained by MarketWatch and people familiar with the firm's performance.
Red Kite, run by Michael Farmer, Oskar Lewnowski and David Lilley, asked investors in its metals fund to approve an amendment that would require 45 days notice before money can be withdrawn, according to a copy of a Jan. 31 letter from the firm. Previously, investors could redeem at the end of each quarter with 15 days' notice.
The change will mean that investors have to send redemption notices to Red Kite by Feb. 15 to get their money back at the end of the first quarter, the letter explained.
"Given the current size of the fund we believe that to maintain efficient operation it is necessary to increase the withdrawal notice period," the firm said.
Hedge funds sometimes extend redemption notice periods if they're expecting large investor withdrawals. By getting more advanced notice, funds have more time to sell positions and return investors' money in an orderly fashion.
It's not clear whether any Red Kite investors want to redeem. A representative at the firm's New York office declined to comment and said Lewnowski wasn't available to comment.
Red Kite has made millions of dollars betting on the price of metals such as copper since it was founded in January 2005. Last year, returns generated by the firm's Compass fund topped 90%.
However, after hitting highs in December, copper prices have slumped more than 20%. Copper for March delivery traded as high as $3.29 a pound intraday in December, then fell as low as $2.48 in January. It's now trading around $2.53 a pound.
Red Kite lost as much as 15% in January, according to three people familiar with the firm's performance. Losses exceeded 2% in December, according to a performance update from Red Kite's Compass fund that was obtained by MarketWatch.
Red Kite partner Lilley told reporters at a commodities conference in Shanghai last week that copper prices had fallen further than he'd expected, suggesting it was a good time to buy the metal.

 

[Wysiwyg]

Launched Jan 2005, this article from April 2005 -

"Red Kite Management launched its Red Kite Fund with $25
million in January, and has since expanded the vehicle to
nearly $100 million. The fund invests in futures, options and
physical contracts involving copper, nickel, zinc, lead, tin
and aluminum, following a strategy that principals Michael
Farmer and David Lilley used to rack up average annual gross
returns of 48% at former employer MG Metal and Commodity.
The Red Kite fund is up 9% since inception.
Farmer and Lilley are based in London. Red Kite’s other
two principals, David Waite and Oskar Lewnowski, are stationed
in New York.
Farmer, who has more than 40 years of experience in
metal trading, got his start at Philipp Brothers in London. In
1990, he joined MG Metal, a London division of
Metallgesellschaft, to run the metal-trading business. That
operation went public in 2000 and was later purchased by
Enron, but then folded after the company’s collapse.
Lilley worked with Farmer at MG Metal, and with
Lewnowski at a metal-investment and trading outfit owned
by private equity firm Safeguard. Lewnowksi’s father, who
has the same name, owns hedge fund administrator Olympia
Capital.
Waite has been in the metal business for more than 30
years, during which time he separately headed units at Drexel
Burnham Lambert, PaineWebber and Rudolph Wolff. In 2000,
he set up his own consulting shop, Commodity Risk
Management Associates.
Red Kite selects its investments by combining a technical
trading approach with fundamental analysis of supply and
demand. Because the firm deals in physical contracts with
metal users and producers, it claims to have a better grasp on
the market than trading shops that deal only in futures ””
and thus communicate almost entirely with other traders.
Red Kite’s fund has a minimum investment requirement
of $500,000, with no lock-up period. Investors may withdraw
capital on a monthly basis. Fees are equal to 2% of
assets and 20% of profits.

The answer is simple...all they have to do is turn their reality into a dream.

 

[Dr Doom]

Yes, I think he's hoping it's a dream - famous last words -

Jan. 23 (Bloomberg) -- David Lilley, a partner at Red Kite Management Ltd., which has base-metals hedge funds worth more than $1 billion, says copper prices will rebound on rising industrial and housing demand in China and the U.S.

The metal has tumbled far enough from an all-time high last May to have reached ``fair value,'' and investors should buy now, Lilley, 40, said in an interview Jan. 20 in Shanghai. "Copper prices have gone down further than I expected,'' he said. "It is a good time to buy.'' He also favors aluminum.

He must be losing with aluminium too by the sound of it.

Full story here

 

[EasternGrey1]

``Copper prices have gone down further than I expected,'' he said. ``It is a good time to buy.''

Good for him if you buy, that is - if no-one buys he's in deep sh*t.

He must be losing with aluminium too by the sound of it.

Got it in one.

There are interesting times ahead .......

 

[Wysiwyg]

Yes, I think he's hoping it's a dream - famous last words

Look what you`ve done now chicken little... by Monday the forum will have collapsed. And where is that foxy loxy?

 

[BREND]

Since other hedge funds are pushing down copper price, trying to force Red Kite to go into margin call (and not because they are bearish on copper), I guess the funds will cover back their position soon, and hence a weak rebound for copper is expected.

 

[toothfairy]

If they have made 90% profit last year for the investors, why are they worried about a 15% loss this January. One can't expect UP is the only way. Not even for a red kite! Rediculously greedy IMO.

 

[Ken]

Will this have an effect on OXR?

 

[BREND]

If they have made 90% profit last year for the investors, why are they worried about a 15% loss this January. One can't expect UP is the only way. Not even for a red kite! Rediculously greedy IMO.

Copper price came down from $7000 to $5350, futures being a leverage product, I dont think loss is only so small.

 

[CanOz]

Copper price came down from $7000 to $5350, futures being a leverage product, I dont think loss is only so small.

Very good point. How long does it take for these funds to get a dose of regs?

 

[nizar]

If they have made 90% profit last year for the investors, why are they worried about a 15% loss this January.

Because success breeds expectation.

 

[nizar]

Red Kite partner Lilley told reporters at a commodities conference in Shanghai last week that copper prices had fallen further than he'd expected, suggesting it was a good time to buy the metal.

LOL what a suprise!

 

[BREND]

LOL what a suprise!

No surprise, they lose money on copper, so they say copper is good to buy, hoping that market will push up copper price. But reverse happens.

 

[nizar]

No surprise, they lose money on copper, so they say copper is good to buy, hoping that market will push up copper price. But reverse happens.

LOL sarcasm my friend.

 

[chops_a_must]

They may have lost more:

Red Kite Fund Lost 30% on Metals Bet in January, Investors Say

By Saijel Kishan and Chanyaporn Chanjaroen

Feb. 5 (Bloomberg) -- Red Kite Metals, part of a $1 billion hedge fund run by RK Capital Management LLP, lost about 30 percent in January as metals prices tumbled, said two investors in the fund.

The slump followed a 9.4 percent decline in copper last month, said one of the investors, who declined to be identified because details of the fund's performance are confidential. David Lilley, a London-based partner who on Jan. 20 said he was bullish on copper, would neither confirm nor deny the loss in an e-mail today.

RK Capital, co-founded two years ago by Michael Farmer, was one of the best-performing commodity funds in 2006 as prices for copper, zinc and related metals surged, the result of expanding economies in Asia. Copper and zinc sank on Feb. 2 on concern Red Kite investors would demand their money, forcing the hedge fund to sell contracts to raise cash and driving prices even lower.

``Size is important in commodity markets,'' said Kimberly Tara, chief executive officer of Geneva-based FourWinds Capital Management, which invests in commodity funds. ``If your assets are large in relation to the markets you trade in, you have to take big positions. Those positions then become transparent and expose you to larger risks in the market.''

Farmer, 62, was previously joint chief executive of MG Plc, formerly the world's largest copper-trading company. Farmer didn't respond to an e-mail seeking comment today. The Wall Street Journal reported Feb. 2 that Red Kite asked investors to give more notice before they withdraw from the fund.

Copper prices on the London Metal Exchange declined for a sixth consecutive month in January as global inventories increased of the metal, used in wires and
http://www.bloomberg.com/apps/news?pid=20601087&sid=atRvmtfqfvo0&refer=home

 

[chops_a_must]

And just as a side note, wasn't it hedge funds going belly up that collapsed the natural gas market last year? Markets don't like uncertainty, many investors might be thinking if their hedge funds are next.