With commodities taking center stage in the financial markets for the past few months, it’s time we take a look at the legends who have conquered this arena. Here’s a quick roundup of the famous commodity traders in the last decade.
Jim Rogers is best-known as the co-founder of the Quantum Fund of the similarly-famous George Soros. While this fund’s claim to fame is its legendary pound short position during the UK Black Wednesday Crisis of 1992, Rogers’ commodity trades also contributed a considerable chunk to its gains.
In 1998, Rogers created his own commodity index fund at an initial $200 million investment, raking gains of 165% by 2007. Around that time, the commodity markets cooled as global investors turned their attention to equities and currencies during the financial crisis, but Rogers has been a regular guest at financial news programs to discuss his longer-term outlook for commodities.
He retains his bullish outlook for agricultural commodities, primarily because students aren’t studying to be farmers anymore. For him, this could lead to a period of lower supply coupled with steadily growing demand, thereby keeping an upward pressure on prices.
While George Soros is more popularly dubbed as “The Man Who Broke the Bank of England” with his short pound position, he is also a successful commodities trader. In 2012, he cashed in a 65% gain on its gold and silver holdings, adding 884,000 shares of SPDR Gold to Soros Fund Management. Just like Quantum Fund co-founder Rogers, Soros is also bullish on agricultural commodities and has a $232 million stake in a South American food and energy company. In 2015, Soros moved $2 million into coal producers Peabody Energy and Arch Coal.
Earlier this year, it was reported that Soros increased his bullish position on gold. According to SEC filings, Soros Fund Management bought 19.4 million shares of Barrick Gold and bought call options on 1.05 million shares of SPDR Gold Trust, which is the world’s biggest exchange-traded gold ETF.
Sharing Soros’ latest bullish gold bias is Stanley Druckenmiller, who is a popular American hedge fund
manager. He is the former Chairman and President of Duquesne Capital, which was founded in 1981 then closed in 2010 due to its inability to deliver high returns.
Druckenmiller managed money for George Soros in 1988 to 2000 as the lead portfolio manager of Quantum Fund, generating $260 million in 2008. In 2015, he set a large new investment in SPDR Gold Trust ETF to the tune of 2,880,000 shares. He also has investments in Newmont Mining Corp, Haliburton, and Freeport McMoran.
John Arnold is known for his positions on natural gas and energy commodities. He started his career at Enron in 1995 before founding Centaurus Energy in 2002 with an initial capital of $8 million from his own pockets.
This firm rose to fame when the fund raked in billions of profits in a single timely natural gas position. Around that time, a different hedge fund called Amaranth Advisors had large long positions on natural gas in anticipation of a run-up in prices following Hurricane Katrina in 2005. Arnold’s fund took the opposite position and chalked up more than 300% in returns for its investors for a $1 billion position.
Louis Bacon began his commodities trading career right from the New York Cotton Exchange before eventually working his way up to be the Senior Vice President of futures trading at Shearson Lehman Brothers. He also had brief stints as a clerk on New York coffee, cocoa, and sugar exchanges. A few years later, he founded his own firm called Remington Trading Partners which profited from a market rebound in the 90s.
Soon after, he created Moore Global Investments with $25,000 of his inheritance. This fund earned 86% in returns during its very first year, due partly to a purchase of oil contracts ahead of Saddam Hussein’s invasion of Kuwait. Word through the grapevine is that Bacon was able to earn $100 million in most of his trading years, making him one of the top 20 earners in Wall Street. Currently, Moore Capital Management is known to have more than $9 billion in funds under management.
Larry Hite ventured into commodities trading after a few failed endeavors in the 70s. He founded Mint Investment Management in 1981, a fund based on computerized statistical models. This fund generated more than 30% in returns each year from its inception until 1994, growing into the largest commodity trading advisory in the world.
Hite continued to focus on trading models then soon formed Hite Capital Management, which is a family organization that boasted of a 70% return in 2008 and only a single year of losses. He is known as the forefather of trading systems, eventually partnering with the International Standard Asset Management (ISAM) to create a multi-strategy platform of liquid hedge fund strategies.
Victor Sperandeo or “Trader Vic” is currently the President of Alpha Financial Technologies and is considered an expert in the metals and energy sectors. His foray into the financial markets started during his days as a Wall Street quote boy before he opened his own personal account and never had a losing year since 1971 to 1988.
He is also known to have predicted a market crash back in 1987, earning a spot among renowned forward-thinkers in the trading community. His trading techniques focus mostly on technical analysis as he puts life expectancies on bullish or bearish moves.
Apart from his profits in the commodities sector, he is also known for his Dow short position ahead of Black Monday and the 300% in profits that he reaped. Sperandeo is also the author of several trading books such as Trader Vic: Methods of a Wall Street Master, Trader Vic II: Principles of Professional Speculation, and Trader Vic on Commodities: What’s Unknown, Misunderstood, and Too Good to be True.
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