The fund, whose heavy losses in January sent shivers through metals markets, lost 22 percent in November, said the source, who is not authorized to speak publicly about the fund.
BOSTON (Reuters) - Hedge fund Red Kite Metals suffered double-digit losses last month as metals prices declined further, a source familiar with the matter said on Thursday.
The fund, whose heavy losses in January sent shivers through metals markets, lost 22 percent in November, said the source, who is not authorized to speak publicly about the fund.
The year's heavy losses at Red Kite stand in stark contrast to the roughly 190 percent return in 2006.
The fund is one of three managed by RK Capital.
!ADVERTISEMENT!Red Kite did not return telephone calls from Reuters seeking comment.
Earlier this year, the Red Kite Metals fund managed roughly $1 billion. But as investors saw the early performance numbers, many were said to have become nervous.
Traders in metals markets said there was talk that Red Kite, known to have a bulk of its investments in copper, had been selling physical stocks of the red metal to honor investors who wanted out.
"The easing in the copper market and the rush of metal into warehouses seen from the third quarter onwards could be explained by physical sales to meet redemptions," a metals merchant told Reuters.
Copper stocks on the London Metal Exchange declined by 850 tonnes to 190,350 tonnes on Wednesday, but were still up about 90 percent since the middle of July.
In terms of value, U.S. copper futures have fallen about a third since touching their peak for 2007 in early October. News of Red Kite's November losses were partly to blame for Wednesday's 2.5 percent loss in the benchmark March copper contract in New York's COMEX metals market.
"There's a school of thought that they (Red Kite) are being forced out of their positions. And each time we go lower, they are in turn forced to liquidate additional (copper) length they have," a New York metals trader said.
"It's minimizing the damage the damage that's already occurred and they have to pay for the redemption to their investors who are coming in and saying, 'enough is enough,"' the trader said.
In February, investors at Red Kite agreed to extend the notice period they give before leaving the fund to 45 days from 15 days before the end of the quarter.
At that time, a spokesman for the fund said that the investor base, including major investors, had given the fund strong support and that investor redemptions had been "insignificant."
(Reporting by Svea Herbst-Bayliss; additional reporting by Barani Krishnan in New York, editing by Matthew Lewis)
