You really have to work hard to lose money on energy when oil is over $100 and North American natural gas is finally responding to fundamentals that have been building for more than 2 years. Looks like someone else was betting on energy prices falling into a recession?

Saracen Energy Hedge Fund Lost 22% in February on Gas Trades

By Saijel Kishan
March 7 (Bloomberg) -- Saracen Energy Partners LP, a Houston-based energy hedge fund, lost as much as 22 percent last month because of wrong-way bets on the price of U.S. natural gas, two investors said.

The fund, founded by Neil Kelley, slumped as much as 32 percent in January and February, according to the investors who declined to be identified because the information is private. Messages left for Kelley through his assistant weren't returned. Allison Duensing, a spokeswoman for the fund, didn't respond to e-mails and messages left on her phone and with colleagues.
`
`In general a drop of about 20 percent in a month is down to poor risk management,'' said Chris Goekjian, chief investment officer of London-based Altedge Capital U.K. Ltd., which invests in hedge funds. ``Funds shouldn't have such big positions, especially when liquidity is relatively low across most markets these days.'' Altedge isn't an investor in
Saracen.

Saracen managed about $1.6 billion, according to a letter sent to investors last year. Kelley, who graduated from Massachusetts Institute of Technology in 1981, was a former vice chairman of Rotterdam-based commodity trading company Vitol Holding BV. Saracen, started four years ago, also trades oil, carbon emissions and coal.

The fund bets on price differences between natural-gas futures, one of the investors said. Prices increased 16 percent last month after inventories fell. Futures are contracts for delivery of a security at a specified time in the future at an agreed price.

Amaranth Loss
An employee sitting at a desk in the reception area of the company's headquarters on the 13th floor of a building in Houston's Greenway Plaza complex, visited by Bloomberg News yesterday, said no one was available to respond to questions.

Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising asset prices and participate substantially in profits from money invested.
Amaranth Advisors LLC, which was based in Greenwich, Connecticut, collapsed after losing $6.6 billion in 2006 on natural-gas bets, the most ever by a hedge fund.

Saracen's loss in February compares with an 11 percent return in the UBS Bloomberg CMCI Energy Index of seven energy futures. The HFRX Global Hedge Fund Index gained 1.8 percent, according to Chicago-based Hedge Fund Research Inc.

The February loss was Saracen's biggest-ever monthly decline, according to the investors. The fund returned about 15 percent in 2007, following gains of about 18 percent in each of the previous two years, they said.
Kelley's age was given as 48 in a December 2006 U.S. Securities and Exchange Commission filing.
http://www.bloomberg.com/apps/news?p...uG8&refer=home