Snot First into the Ground

Such was the characterization of hedge fund Red Kite's Friday afternoon by a commenter on the previous post. It's hard to disagree with that assessment.

A short time ago, The Wall Street Journal reported($) that another hedge fund is likely to go belly-up in the very near future.

Red Kite Management Ltd.'s $1 billion metals-trading hedge fund, a highflier that racked up gains last year, has suffered losses so far in 2007. Now Red Kite is asking its investors to give it more notice before they withdraw from the fund.

As of Jan. 24, the London-based firm was down about 20% for the year, according to an unofficial estimate that the fund provided to one investor. It was Red Kite's worst one-month performance in at least a year, according to an investor who has seen the firm's results.

That is a turnaround from gains of more than 190% for at least one of the firm's hedge funds last year betting on various metals.

Management at Red Kite declined to comment on the developments. Bloomberg has some more details here indicating losses of 27 percent so far this year.

It doesn't look good. What are the odds that the responsible trader is in his thirties like Brian Hunter at Amaranth last year?

Anyway, elsewhere, it was another interesting week in the world of hard assets. The model portfolio monitor directly to the right has stuck its head up above the zero mark for the year - four solid weeks of gains following a week one meltdown did the trick.

Oil is in the news again - it looks like we'll see $60 before long.
Oil stocks did well as Exxon Mobil reported earnings for 2006 - about $108 million a day or $39.5 billion for the full year. Lots of companies would be happy with $108 million for an entire year.
Gold tested $650 and retreated for the second time in the last two weeks - the third time's the charm. Don't worry about the IMF gold sales - they'll probably never happen, and if they do, China, Russia, the UAE, Argentina, and other central banks of resource-rich countries will be lining up to trade U.S. dollars for the shiny metal bars.
The gold miners continue to be stuck in the mud - there will likely be a slingshot effect if gold and silver really get going in 2007.
And the dollar just hangs in there - looking quite good in comparison to the Yen lately. Those Japanese central bankers have got to be the worst in the world.
On a completely unrelated note, Punxsutawney Phil says, "Expect an early spring".

Ned: Phil? Phil Connors? Phil Connors, I thought that was you!
Phil: Hi, thanks for watching.
[Starts to walk away]
Ned: Hey now, don't you tell me you don't remember me 'cause I sure as heckfire remember you.
Phil: Not a chance.
Ned: Ned... Ryerson. "Needlenose Ned"? "Ned the Head"? C'mon, buddy. Case Western High. I did the whistling belly-button trick at the high school talent show? Bing. Ned Ryerson, got the shingles real bad senior year, almost didn't graduate? Bing, again. Ned Ryerson, I dated your sister Mary Pat a couple of times until you told me not to anymore? Well?
Phil: Ned Ryerson?
Ned: BING!
Phil: Bing.