NEW YORK (Reuters) – Brenham Capital Management LP, an energy equities fund supervisor with about $800 million in belongings beneath administration, will shut after two years of losses, its founder stated in a letter to buyers on Friday.
The Dallas-based fund can be liquidated and investor capital shall be returned on the finish of the yr, in accordance to the letter which was reviewed by Reuters.
While oil costs rallied to close to four-year highs in October, these features haven’t prolonged to energy equities, hurting companies such as Brenham. The Russell 2000 Energy index is down greater than 20 % this yr after falling 17 % in 2017.
That index, the fund’s closest benchmark, has misplaced greater than 60 % because the fund’s inception in 2012. Brenham Capital founder John Labanowski stated within the letter that the agency’s internet lengthy funding technique was not working, even as oil costs surged to four-year highs by October. The fund held positions in small and mid-cap shale corporations together with Oasis Petroleum and WPX Energy Inc, in accordance to regulatory filings.
Labanowski additionally stated he was “tripped up by inconsistent OPEC policy.” The Organization of the Petroleum Exporting Countries determined, with different prime producers, to reduce manufacturing in late 2016, however its lead member, Saudi Arabia, reversed course this yr, with manufacturing hitting report highs.
“This ‘make it up as you go’ policy from the world’s oil cartel created a new set of risks and made it difficult to invest in the sector with a longer-term timeframe,” Labanowski stated.
The fund was down 10.5 % in 2017 and down 14.7 % in 2018 via October, stated Dawn Blankenship, a director on the agency.
“I’ve been bullish energy stocks since 2016 and this constructive posture just hasn’t paid off over the last two years,” Labanowski wrote.
Reporting by Devika Krishna Kumar in New York; Editing by Richard Chang