Andurand Scales Back Risk After Record 55% Loss in Oil Bets

Pierre Andurand, founder of the Commodities Discretionary Enhanced hedge fund, has decided to scale back the risk in his investment portfolio following substantial losses incurred last year, according to a Bloomberg report.

In a letter to investors, Andurand explained that his hedge fund had suffered from overly optimistic bets on the oil market, particularly a leveraged position on rising oil prices. This strategy, combined with a 10% decline in Brent crude prices, led to the fund’s largest ever loss — nearly 55% in 2023. Despite this, Andurand remains cautiously optimistic, suggesting that the market might be underestimating the long-term impact of ongoing geopolitical tensions in the Middle East, which could provide upside potential for oil and metals in the months ahead.

While the fund’s performance last year was dismal, it followed a period of remarkable returns, with gains of 154% in 2020, 87% in 2021, and 59% in 2022. Andurand's decision to scale back risk comes after a period of exceptional growth but acknowledges that the oil market may not be as predictable as previously thought.

Looking ahead, Andurand's strategy will focus on reducing leverage and adjusting the fund's approach to better manage potential market volatility while still positioning for potential opportunities in commodities. This move marks a significant shift after the extreme losses faced by the fund in 2023.