Statar Capital Bets on Power as Natural Gas Drives 18% Return
Statar Capital Bets on Power as Natural Gas Drives 18% Return
(Bloomberg) -- Statar Capital LLC posted an 18% return during the first four months of 2022, largely on the back of successful trading in natural gas, and now plans to enter the U.S. power market.
The Miami-based hedge fund, which had $2.8 billion of assets under management as of April 30, is expanding into one of the most historically volatile commodities by adding a power trading desk and hiring industry veterans to diversify beyond its strength in natural gas trading. It comes as there’s a growing drive to electrify more of the U.S. economy.
“Power sits in that sweet spot of what we look at -- fundamental modeling -- and it has synergies with natural gas trading,” Ron Ozer, Statar’s founder and chief investment officer, said in an interview.
Statar’s performance this year adds to last year’s 56% gain and net returns of 332% since its 2018 inception, according to a person familiar with the firm’s performance. Gas typically makes up most of the firm’s portfolio, with oil, metals, agriculture and other commodities accounting for about a fifth, said the person, who asked not to be named because the information isn’t public. Ozer didn’t comment on fund performance.
For its electricity push, Statar hired David Green, who most recently headed energy deals at utility Xcel Energy Inc., and Matt Elchik, who recently resigned from proprietary trading firm DRW Holdings LLC, Ozer said. Steve Boneck, who most recently was a manager of structured analysis at Xcel, is joining as an analyst. The team will start by trading U.S. power on exchanges, with Elchik focused on real-time and day-ahead contracts while Green looks at longer-term contracts.
Ozer sees benchmark U.S. gas futures surging above $10 per million British thermal units, potentially hitting record highs, if the U.S. gets a frigid start to winter. Natural gas futures briefly rose above $8 Tuesday to the highest intraday since 2008.
Europe has been enduring a supply energy crunch that has been exacerbated by Russia’s war in the Ukraine. Meanwhile, Asia is poised to create a bidding war for gas, especially if hotter weather keeps demand for the power-plant fuel strong, limiting stockpiling before the peak winter season.
“You are going to see historic volatility,” Ozer said.
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