Druckenmiller Alums at PointState Make $1 Billion on Oil
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.
PointState, which started 2014 with about $5.8 billion in assets, has been one of the biggest winners from the drop in oil as the U.S. energy industry ramped up production and Saudi Arabia and other OPEC nations chose not to cut supply in the face of increased competition.
The biggest drop in prices since 2008 has roiled global markets, pushing Russia towards recession, Venezuela closer to default and cutting into earnings for U.S. companies. It’s also punished hedge funds and other investors that were betting on the U.S. energy complex. Billionaire John Paulson was among the hardest hit, losing 36 percent in one fund last year in part because of energy company stocks.
When Schreiber spoke at the May conference, he was little known outside the $2.8 trillion hedge fund industry and had a low profile among peers....MORE*
Tuesday, May 6, 2014
Climateer Line of the Day: The Circus that is Oil Edition
The winner of today's CLoD:
...“There’s $33 billion that’s net long WTI,” he says. “Now, if you’re long, I’m sorry for you, but this could make you feel comfortable. At least you have friends.”
Or that could make you scared, he adds. “I’m sure that will be a smooth exit when all those clowns try to get out of the Volkswagen,” he says....-Zach Schreiber, CEO, PointState Capital LPat the 2014 Ira Sohn Conference
Via the Wall Street Journal's MoneyBeat liveblog.
Front month June's $99.58 up a dime.
We agree with Mr. Schreiber