Ex-Centaurus trader finds profitable swings in natgas

Thu Jan 10, 2013 4:38pm EST
 
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By Jeanine Prezioso

NEW YORK (Reuters) - Prominent banks and hedge funds have fled the natural gas market due to the sharp decline in prices but Bill Perkins, a trader at the now-defunct commodity hedge fund Centaurus Energy, says there is still plenty of money to be made there.

Perkins, a protege of billionaire energy trader John Arnold, launched Skylar Capital Management in Houston in October to trade U.S. gas futures, options and swaps, and has raised at least $102.4 million, according to a securities filing that month. Skylar is still raising money from investors and plans to close in about six months, he said, though he would not disclose the total amount of assets under management.

By way of comparison, Taylor Woods Capital Management, the commodity hedge fund founded by former Credit Suisse natural gas trader George "Beau" Taylor, started with at least $150 million in January 2011 and grew to $1.3 billion in March 2012.

The 43-year-old New Jersey native, who has been trading gas since the late '90s, believes investors who focus only on low gas prices are missing out on profits from volatility.

"People tend to look at things in absolute terms and say, 'Oh it's not going to go to $10,' but as a percentage move, the moves (today) are fantastic. The potential is under appreciated," Perkins said in his first interview since the fund's launch.

Natural gas futures prices did not rise above $4 per million British thermal units in 2012.

Overzealous drilling has resulted in a multi-year gas glut, finally sending prices to a 10-year low last spring. Yet despite the negative headlines, natural gas has surprised many commodity market watchers by rising on gas-fired electricity demand.

July 2012 was the hottest month on record in the lower 48 United States, U.S. government data showed, and power demand for air conditioning spiked. Prices followed in kind, rising some 61 percent, from under $2 mmBtu in April to above $3 mmBtu in July.   Continued...

 
Bill Perkins is pictured in this handout photo taken July 17, 2012 and supplied by Skylar Capital. Prominent banks and hedge funds have fled the natural gas market due to the sharp decline in prices but Bill Perkins, a trader at the now-defunct commodity hedge fund Centaurus Energy, says there is still plenty of money to be made there. REUTERS/Skylar Capital Management/Cody Bess Photography/Handout