Ospraie Management, LLC

Ospraie Management - Letter, Holdings, Notes

Below are details on Ospraie Management surrounding the closing of their largest fund - this includes a letter to their investors, a list of the securities they were said to be invested in and more. I think the quote below from Moonraker below explains in simple (maybe too simple) terms what happened to Opraie.

The following piece on Ospraie is being published as part of our daily effort to track hedge fund events in the industry. To review other hedge fund related announcements please see our Hedge Fund Tracker Tool.
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Ospraie Management LLC may be the latest casualty from price swings in natural gas, the commodity responsible for the $1.9 trillion hedge-fund industry’s biggest blowup with Amaranth Advisors LLC.

New York-based Ospraie told investors on 9.2.08 that it will close its biggest hedge fund after losing 38.6 percent this year on bad bets on commodity stocks. Holdings in natural gas-related companies made up almost a fifth of Ospraie’s investments at the end of June, before the commodity’s price dropped 41 percent.
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Thanks to John Lee, here is a letter from Ospraie Management to their investors:

“The losses were primarily cause by a substantial sell-off in a number of energy, mining, and resource equity holdings during a six-week period characterized by some of the sharpest declines in these sectors in the past ten to twenty years. As the Fund’s performance deteriorated, we made the decision – despite continued confidence in the Fund’s positions – to reduce and de-lever the portfolio significantly due to concern of incurring even greater potential losses.”

“After nine years of striving to be a good steward of your capital, I am very sorry for this outcome.”
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According to SEC filings as reported from one site here is a list of the securities that Ospraie did or does owned:

• AA
• ACI
• BHI
• CMZ
• CPN
• CYT
• EJ
• GST
• IP
• LEN
• NRG
• SEB
• VRS
• WCC
• XTO

XTO Energy Inc., a U.S. natural gas and oil producer, was Ospraie’s biggest holding, accounting for 13 percent of its assets, according to a Securities and Exchange Commission filing from June 30. XTO, along with Gastar Exploration Ltd., a gas exploration company in which Ospraie was the third-largest investor, and Compton Petroleum Corp., a Canadian gas company, fell by about a third in the past two months.

“With natural gas I sometimes feel there’s a game of Russian roulette going on,” said Jeremy Charlesworth, founder of London-based Moonraker Fund Management Ltd., which runs a commodities fund of hedge funds. “Natural gas goes through these periods where it goes up two or three times and fortunes are made. And every time it collapses, fortunes are lost and there’s a casualty.” Read more…

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Tags: Ospraie Management LLC, Amaranth Advisors LLC, XTO Energy Inc., Gastar Exploration Ltd., Compton Petroleum Corp., Jeremy Charlesworth, Moonraker Fund Management Ltd., AA, ACI, BHI, CMZ, CPN, CYT, EJ, GST, IP, LEN, NRG, SEB, VRS, WCC, XTO

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