Occidental's Shift Raises Questions for Top Trader
Four Years After Buying Phibro, A Decision to Pull Back on Commodities
Andy Hall, Wall Street's $100 million man, is facing an uncertain future.Occidental Petroleum Corp. is re-evaluating its four-year relationship with Mr. Hall, one of the nation's highest-profile oil traders. The energy company on Friday said it was pulling back from placing bets on the direction of crude and other commodity prices.Mr. Hall and his group, Phibro Trading LLC, moved from Citigroup Inc. to Oxy in 2009 after his $100 million pay package from Citi created a furor because the bank had been bailed out by the U.S. government.But on Friday, Occidental said it would "reduce its exposure to proprietary trading activities related to crude oil and other activities." The announcement raises questions about the company's ownership of Phibro and its relationship with an external commodity hedge fund run by Mr. Hall, Astenbeck Capital Management LLC. In addition to owning Phibro and providing the capital to back its trades, Occidental owns a 20% stake in Astenbeck's holding company.Astenbeck, with $3.5 billion under management, sent a letter to investor clients Friday saying changes in its relationship with Occidental were under discussion at a preliminary stage, and didn't elaborate on potential specific outcomes.Mr. Hall couldn't be reached for comment. Occidental declined to comment on Mr. Hall or its relationship with Astenbeck.The Los Angeles-based energy company also said Friday it would spin off its California operations into a stand-alone company this year, becoming the latest U.S. energy producer to narrow its focus to appease investors.Occidental said it would move its headquarters to Houston from Los Angeles and concentrate on producing oil from the prolific Permian Basin region of Texas and New Mexico. The spin off expects to go public by early 2015 and plans to spend $2.1 billion to shore up oil and gas output in the state.Phibro traces its roots back more than a century, and has gone through several iterations. In 1981 it acquired bond trading house Salomon Brothers, and became part of Citigroup in 1998. Citi sold the unit to Occidental in 2009 for essentially the value of its trading positions.Through Astenbeck, Mr. Hall has been a largely bullish player in oil markets, placing bets that oil prices far in the future would rise as contracts for those time periods become more immediate, according to investor documents and people familiar with his strategy.Since its inception in January 2008, the hedge fund has an average annualized return of about 5%, the investor documents show. More recent results have been negative: The fund lost 8% last year and dropped a further 2% last month, the documents indicate....MORE
