Red Kite said in the court filing that Barclays' proprietary traders were able to see the hedge fund's confidential trading positions on the London Metal Exchange (LME) that were being executed by another division of Barclays. The Red Kite Group, which has hedge funds, physical trading and mining finance, has about $2 billion of assets under management, according to its website. COPPER During the period covered by the case, copper prices surged to a peak of just over $10,000 a tonne in 2011, one of the boom years for commodities, driven by China's appetite for raw materials to build infrastructure.Excess supply later pushed prices to a low of about $4,300 by early last year. Red Kite did not respond to Reuters' requests for comment.
#RED KITE HEDGE FUND LONDON FREE#
Red Kite agreed when signing the bank's terms of business that "Barclays would remain free to have interests and duties adverse to the interests of the proprietary (Red Kite) funds," the bank's defence document said. "Barclays had detailed policies and procedures in place for protecting confidential information, in particular that of its clients," it said in the document.īarclays said its executives only used Red Kite's confidential information on its market positions for legitimate business purposes, such as assessing the fund's credit exposure to the bank. The initial legal documents were filed in Britain's High Court in October last year but only recently made public.īarclays has denied the claims in a court filing. In court papers, Red Kite alleges that Barclays committed market abuse by manipulating market prices and using information from Red Kite about the hedge fund's copper positions from 2010 to 2013 to take lucrative opposing trades on metals markets. Orion now reportedly manages about $7.8 billion – around twice as much as Red Kite managed at its peak in the early 2010s.The case pits one of the world's biggest metals hedge funds, whose co-founder Michael Farmer was a former treasurer of Britain's Conservative Party, against one of Europe's biggest investment banks. Some of the old guard are back in business though, with different companies, including metals veteran and Red Kite co-founder David Lilley whose new firm, Drakewood Capital Management, has closed its fund to new investors with assets above $1 billion and is working on a new fund that will include physical metals investments.Īnother Red Kite alumnus Oskar Lewnowski’s Orion Commodities Fund LP, part of his wider Orion Group, has also seen new investment, with $1.6 billion under management at the end of October. Quantix’s Commodities Alpha Fund with $1.7 billion and Pimco’s Commodity Alpha Fund with more than $2 billion, are two of the new breed which have attracted significant funds, while teh report cites unnamed sources as also identifying East Alpha and Star Capital as major players. The new breed of manager attracting investor interest are technically focused quant traders rather than the high profile, 'big beasts' who once dominated the space.
Some new players in the space have already closed to new investors, while big macro firms are on the look out for top talent as they boost their commodities teams. The report cites preliminary data from Bridge Alternative Investments as revealing that the top 15 commodity-focused hedge funds have increased their assets by 50% this year to a combined $20.7 billion.
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