Pierre Andurand bets the house on oil shock and wins.
The former Goldman Sachs trader, Pierre Andurand saw the oil shock that played out in early February coming. Pierre Andurand’s classic contrarian play paid off hugely, propelling the French oil trader’s Andurand Capital fund over 150% against the composite hedge fund index and the S&P 500 Index, year to end April.
The prevailing view at the time was that the coronavirus was a localized health issue in China and that cyclical commodities were on track to making a recovery.
Oil prices surged to nearly $70 a barrel for Brent and $63.05 a barrel for West Texas Intermediate, the American oil benchmark, in early January in the wake of President Trump authorized airstrike against Maj. Gen. Qassim Suleimani at Baghdad’s airport.
Qassim Suleimani’s assassination sparked concerns of a regional war that didn’t materialize.
“Andurand Capital fund over 150% against the composite hedge fund index and the S&P 500 Index”
WEALTH TRAINING COMPANY
So in light of the geopolitical tensions at the time Pierre Andurand bets the house on oil shock, a massive slump in oil prices to the point of unprecedented negative prices for crude oil was a bold move
Pierre Andurand’s bearish bets on oil was a wonder win for the Andurand Capital fund which was struggling with losses and redemptions.
Back in February, we wrote in a piece entitled, “Pierre Andurand clocks big losses” as his bullish bets on the energy market fall on the losing side.
But as oil traders know, trading oil has many wildcards.
“So here is a wild call. Could the big oil suppliers be playing a survival of the fittest game? Keep an eye out for OPEC bickering over supply cuts. If there are no cuts, in the pipeline then you know where this is going. Then “buy when there is blood on the streets” Rothschild,” we wrote back in February.
“Pierre Andurand’s bearish bets on oil was a wonder win for the Andurand Capital fund which was struggling with losses and redemptions”
WEALTH TRAINING COMPANY
OPEC flooding the market was predictable. But a pandemic followed by a global lockdown was the black Swan event that sent May crude futures contract into unprecedented territory, negative prices
“I’m not sure how to react to that other than say that nobody, whether they’re 120 years old or whether they’re 20 months old, has ever seen an oil price lower than this” Tom Kloza, a 40-year market veteran and head of global market analysis for Oil Price Information Service, told MarketWatch on that Memorial Day when May future oil prices turned negative.
Despite this calamity in the oil market, Pierre Andurand bets the house on a massive slump in oil prices and wins
Pierre Andurand takes out a series of large-scale futures and options bets he made against the oil price in early February which landed deep in the money.
“Even my team thought I was crazy when I told them oil prices could go negative” – Pierre Andurand
“Even my team thought I was crazy when I told them oil prices could go negative” said Pierre Andurand. “But everything I had studied on this virus convinced me that the world was in trouble” added the oil trader
Pierre Andurand’s latest move is in keeping with his reputation as a trader who performs best when markets are at their most volatile. Pierre Andurand has successfully profited from almost every large oil price swing of the last 17 years.
But Pierre Andurand’s trading career has had its ebbs and flows
Pierre Andurand also clocked big losses on bullish oil bets as the downtrend in the energy market was particularly acute during the first quarter of 2020 as the black swan event COVID 19 became a reality, a global pandemic.
At his lowest point Pierre Andurand experienced 24 miserable months where he lost money in consecutive years.
The once $1.6bn Andurand Capital Fund was shrinking as even long-term investors grew nervous, leaving him at one of the lowest points in a 20-year career.
“It’s so easy to lose confidence and I have lost confidence many times, to be honest” – Pierre Andurand
“It’s so easy to lose confidence and I have lost confidence many times, to be honest” said Pierre Andurand. “I was wondering if we’d ever get the opportunity to make money again. But the key in this industry is to be resilient” he added
That opportunity did come again in late February as Pierre Andurand bets the house on oil price collapse and sent the performance of his fund above 150% of his contemporaries.
Pierre Andurand has been described as the comeback kid, the hotshot trader living the jock-bro dream, driving a Bugatti supercar, a Knightsbridge townhouse, and a trophy wife Russian model.
But perhaps he is not much more than a lucky punter bankrolled by patient investors with deep pockets. After all, real oil traders don’t move paper, they move the real stuff, cargoes of oil.
So Pierre Andurand bets the house on oil price collapse in late February but how different the outcome would have been if a geopolitical flare-up in the Middle East, the assassination of Iranian General Qassim Suleimani occurred one month later in say February or March. What would have happened if such an event sparked a regional war? Surely, oil prices would have rocketed and Pierre Andurand bearish oil bets would be deep underwater. Pierre Andurand wouldn’t be making a victory lap in his Bugatti supercar, perhaps he would be selling it.
Pierre Andurand bets the house on oil price collapse and wins perhaps could be not much more than gambler’s lucky streak, or randomness
Even a Broken Clock is Right Twice a Day.
Pierre Andurand now lives in Malta and he has undertaken three master degrees, including one at Oxford University in theoretical physics. He is also teetotal, living an alcohol-free life.
“I realize sometimes I need to be kind to myself” said Pierre Andurand. “But when there’s too much going on for me, my weakness is I eat too much and I put on weight” he added.
While Pierre Andurand bets the house on oil price collapsing in late February he also admits that he is not a deal junkie
“If you look at my track record, it’s a few big trades” he said. “I’m not a hyperactive deal junkie. I can go weeks without making a trade”.