Woodbine Capital

 

Woodbine Capital Advisors LP is a hedge fund founded by two ex traders from George Soros’ Soros Fund Management. Josh Berkowitz and Marcel Kasumovich launched the fund in 2008.

We noted last month, that the fund was experiencing heavy redemptions, as initially reported by Michelle Leder of the NYPost. Assets under management declined from over $3 billion to $500 million.

It looks like investors missed out on another down month. According to our sources with direct knowledge of the matter, Woodbine Capital was down 2.2% for the month of June. The year to date return for the firm is -1.5%. American investments were up 0.3%, which was offset by European investments down by 2.5%. Foreign currency positions were down 1.5%. Our sources did not have information on fund flows.

The Euro/dollar short position was down, as the Euro rallied on news of a possible agreement on a common European banking supervisor. The portfolio managers think that the European agreement is a positive for the Euro-zone. However, implementation is not over, and risks include Greek renegotiations, and recapitalization of banks. It could take a few months for volatility to die down. The fund managers are investing in long duration credit outside of Europe. The ECB’s recent lowering of interest rates should cause further weakening of the Euro.

The fund continues to short the Euro. The position is Euro short versus the dollar, British Pound, Aussie Dollar, and Mexican Peso. The firm does not like the dollar, but sees it as a good currency to trade against the Euro. However, the Mexican Peso could benefit as investors hungry for yield buy more of the currency. The ultralow yields in countries like Denmark and Germany, also makes Woodbine bullish on gold. Easing is expected in countries around the world, including South Korea and Brazil. This will further drive gold prices higher.

Woodbine also likes 30 year Mexican Government bonds. They expect the country to be upgraded as the economy goes through structural reforms. In general, investment grade emerging market bonds are at an unreasonable premium to Sovereign investment grade bonds.

The fund made one great bet in the commodity area. Woodbine put a long position on corn and soybeans. As the drought in America has reached record levels, corn and soybeans hit a record price on Wednesday. Corn is up 23% for 2012, while Soybeans are up 40%, according to an article by LIAM PLEVEN and OWEN FLETCHER in The Wall Street Journal.

 

(Disclosure: No positions in any securities mentioned)