Article: Reuters
Ebullio launches short-term Commodity Fund
By Eric Onstad
Ebullio Capital Management said it has launched a second commodities fund, seeking to capitalise on short-term momentum plays in round-the-clock trading, including during volatile Asian hours.
Ebullio spun off its eFED Commodity Futures Fund from its original Ebullio Commodity Fund, which has been trading since 2008 but made large losses in 2010 after it was forced to liquidate metals positions.
Over the past few years, Ebullio portfolio managers noticed increasing volumes on the London Metal Exchange's (LME) Select electronic platform during Asian trading hours and established a separate overnight desk.
They also found that volatility was often higher and momentum stronger during Asian trading from 0100 GMT, said Gregory Cain, portfolio manager of the new fund, which was launched last month.
"When the market trades in a certain direction, all the Chinese traders get involved, so it exaggerates the move," he said.
Ebullio, based in Essex east of London, expanded the strategy to cover U.S. and European hours, creating a 24-hour trading desk. Last year, Ebullio established a separate account for its Far East desk within its existing Commodity fund and tracked its performance.
Last year, it would have returned 50.7 percent if it had been a separate fund, compared to an 8 percent decline in the 19-commodity Thomson Reuters Jefferies CRB index. During January, it gained 1.3 percent compared to a 2.3 percent rise in the CRB.
FOCUS ON BASE METALS
The fund has the scope to trade across commodity products, although so far it has focused mainly on base metals with some trades in energy and precious metals.
The majority of trades are short-term, with 80 percent intraday, 10 percent held two to seven days and another 10 percent are spread trades lasting one to seven weeks.
The fund so far has $2 million in assets, with an initial capacity of $250 million.
Ebullio would like eventually to gain access to the Shanghai Futures Exchange, due to its growing volumes and active arbitrage business with the LME, and the firm is considering establishing an office in Asia in the future, Cain added.
The original Ebullio Commodity Fund will remain focused on macro and fundamental strategies complemented by some physical trading in base metals.
One trade the Commodity Fund expects to be profitable this year is the gold-platinum ratio, which is expected to reverse to bring platinum to a premium over gold. Currently, gold trades about $80 an ounce higher than platinum.
"If you look at what's going on in South Africa and the risks to platinum production... we've been adding to that position for the last three to four months," said Ebullio partner David Sutcliffe.
The Commodity Fund lost 4.4 percent last year and has assets of $7 million.
The previous year the fund was forced to liquidate positions in metals futures. Assets of the fund dropped nearly 70 percent in January 2010, four months after traders had said Ebullio controlled more than 90 percent of London Metal Exchange tin stocks and cash contracts.
During the summer of 2009, some traders and consumers said a dominant position had caused the tin market on the LME to become disorderly and distorted prices.
We are pleased to announce that our Chief Risk Officer, Mr Steve Yolland, has been promoted to Head of our Marketing and Investor Relations Group and that Mr Norbert Nemes has been promoted to Senior Associate in the same Group.
Steve and Norbert will be working closely with Paul Hudson, our former head of the Group; Paul is leaving us to become a 3rd party marketer (which will allow him to get involved with his first love: FX trading and algorithms). Paul will still help us market our funds and remains a firm and valued friend.
We thank Paul very much for his invaluable contribution to our growth and success; and also for his unweathering support, when the going sometimes got rough. We wish Paul all the best in the future.
Article: The Telegraph
Debt Crisis: as it happened
By Szu Ping Chan and Andrew Trotman
Jonny Tremaine, at Ebullio Capital Management, said: “I think it's a little over-hyped (referring to the stand-off between Iran and the West). My overall view is that I'm bearish crude in the short to medium term - if we didn't have this geopolitical tension crude would be a lot lower. If they did fully ban Iranian oil it would be so harmful for the global economy. I don't think political leaders would make a decision as silly as that.”
Article: Reuters
Ebullio bets on end to EU crisis, commods rally
By Maytaal Angel
Europe's debt crisis will intensify but will end next year with the European Central Bank propping up banks and sovereign debt, at which point commodities will begin an ascent to all-time highs and beyond, Ebullio Capital Management said Monday.
Chief amongst these will be gold XAU= which is set to hit an all-time high of $2,000 an ounce next year and could even double to $4,000 over the next couple of years as ECB money printing deflates paper currencies versus safe haven assets, said Lars Steffensen, managing partner at UK-based Ebullio.
Next in line is oil CLc1 LC0c1 - a punt on macro-economics and geo-politics - which is likely to trade near records around $140 a barrel over the next two or three years, but might see $200 and beyond if action is taken against a nuclear-armed Iran.
Lastly copper CMCU3, the bellwhether metal used as a bet on China's growth, is positioned to touch $9,000 a tonne as early as the first half of next year, and could trade at a record $10,400 to $10,500 on a two year timeframe.
"The Germans should act now but I think they need to be staring down the barrel of a gun. I think it will take a big German bank on the brink, when they're staring at that they'll beg the ECB to act," said Steffensen.
"I think this (EU debt crisis) will get sorted out. Eventually the ECB will step in as a lender of last resort, there's no doubt about that, but until then we're going to see massive sell-offs."
Commodities rallied on Monday as a report, later denied, that the International Monetary Fund was preparing a 600 billion euro rescue plan for Italy sparked hopes that concrete steps were under consideration to tackle the debt crisis.
But the obstacles for Europe remain formidable, given German Chancellor Angela Merkel for now is maintaining her opposition to common eurozone bonds and to the ECB guaranteeing European banks and their government's debt.
Her opposition, which has weighed heavily on all commodities except possibly oil, has remained fixed despite even German government bond yields hitting month highs and stress in the European bank-to-bank lending markets.
"The Germans are trying to push reform in individual countries, but you can't have reforms overnight, and not to want to wait for (reform) to happen the slow way is unrealistic because economies will collapse, the banking system will collapse," said Steffensen.
"Germany will have no one left to export to so their economy will collapse. It's like a supermarket saying sorry you can't have credit but we don't take cash either so go away. Reflating the economy is the only way out of this."
Given that such reflating does not appear to be on the cards for now, Ebullio is maintaining its short positions on both the base and the precious metals for the next two to four months, but not on oil.
The commodities hedge fund returned a profit of 1.47 percent in October, but is still down 36.42 percent in the year to October.
This compares to year-to-date falls of 1.48 percent for its peers, as compiled by fund research company Lipper Global Hedges.
Ebullio believes copper could fall to $6,200-6,500 short term, though the metal, along with export-strapped tin, remains its favoured pick in the sector, given that China is looking to exchange its dollar reserves for tangibles, most usefully, copper.
On gold, Ebullio sees a drop down to $1,400 an ounce in the short term, and is currently short gold, long platinum, because it believes gold should be $150 below platinum, not above, as it is presently.
Its least bearish stance though is reserved for oil, which Ebullio bets could fall perhaps near $80 a barrel, but which it nevertheless will not short except on a day trade basis and excluding over the weekends.
"I don't think Israel will allow a nuclear Iran, this might be the window (Israel) takes to do something about (Iran) and if that happens crude could be at $200-250 a barrel, which is a game changer like the collapse of the financial system."
"On oil I'm short overnight with a barge pole. Being short crude aggressively just carries such a black swan event risk that its not something you can recommend, I'd rather be short base and even precious metals."
Ebullio Capital Management LLP is pleased to announce that our Chief Risk Officer, Steve Yolland has been promoted to Partner. The Partners of Ebullio appreciate Steve’s hard work and dedication since joining us in January 2011 and welcome him warmly to the Partnership.
Article: Fastmarkets
Ebullio Commodity Fund surges by more than 33 pct in September
By: Barbara Davis
Ebullio Capital's commodity fund soared by more than 33 per cent last month despite turbulent market conditions, helped by a solid performance from its physical trading division as well as its Far East desk (eFED.)
“Our physical copper book, and the profits/optionality built into it, is finally starting to contribute substantially and we expect this to continue for the rest of the year and throughout 2012,” CEO Lars Steffensen said in the Southend-on-Sea-based hedge fund's latest memo.
China will continue to pour money into hard assets, while currencies and other asset classes will lose appeal, he added.
"There is a huge Chinese bid under all commodities," Steffensen said. "The Chinese know that the value of dollars will be halved above the next several years, so they are happy to invest in more tangible assets - particularly copper."
But a small tail risk still haunts markets - the collapse of the Eurozone and the financial system, an event that would hurt China significantly "since decoupling is a bunk myth”, he added.
Ebullio Capital Management LLP is pleased to announce that Mr Norbert Nemes has joined our Marketing and Client Solutions Group as an Associate. Norbert brings with him a great wealth of talent and experience and we are very pleased to have him join the team.
Ebullio Capital Management LLP is pleased to announce that Mr Jonny Tremaine has joined our Far East Desk as a Commodity Trader. Jonny joins us from Macquarie Bank and brings with him a great wealth of talent and experience and we are very pleased to have him join the team.