By Chanyaporn Chanjaroen and Lars Paulsson
Nov. 4 (Bloomberg) — Kieran McKenna, who traded oil for Credit Suisse AG and JPMorgan Chase & Co., started a hedge fund that will accept money from outside investors next month, according to Mastic Investment Advisory AG, his new company.
The Mastic Commodity Fund, based in Zug, Switzerland, will begin trading oil and energy products this month with partners’ capital, Mastic Investment said in an e-mail. McKenna resigned from Credit Suisse as global head of oil in July to set up the firm. He declined to give details on the fund’s size or targets.
McKenna, 36, joins ex-bankers from firms including Goldman Sachs Group Inc. and Morgan Stanley who have set up hedge funds after the Volcker rule limited risk-taking by banks following the collapse of Lehman Brothers Holdings Inc. in 2008.
The new fund, which will make “extensive use” of options, has a relative-value biased strategy, the e-mail said. “There are contrasting outlooks from the fundamental hydrocarbon supply-and-demand balance issues that remain unresolved,” McKenna said in the e-mail.
Relative-value investment strategies seek to profit by targeting price gaps between different commodities, or different grades of the same commodity. They can also seek to exploit differences between maturity dates for the same commodity.
Brent-WTI Spread
West Texas Intermediate crude, the U.S. benchmark grade, rallied 18 percent last month as U.S. demand increased and inventories declined in Cushing, Oklahoma. The December-delivery contract traded at $93.68 a barrel at 9:39 a.m. in Singapore.
The gap between WTI and costlier Brent, the standard for more than half of the world’s crude, reached at a record $27.88 a barrel on Oct. 14 and was at $16.76 yesterday. Cushing is the largest crude-trading and storage hub in the U.S.
McKenna’s departure came after the Zurich-based bank replaced an almost five-year trading alliance with Glencore International AG, the world’s largest commodities trader, with a so-called consulting agreement in January.
He joined Credit Suisse in 2008 from JPMorgan and became global head of oil and products for the alliance. He was also a senior oil trader at Citadel LLC in Chicago and London. McKenna started his career in 1997 at Goldman Sachs, where he traded North Sea crude and options, according to Mastic Investment.
–Editors: Jake Lloyd-Smith, Christian Schmollinger
To contact the reporters on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net; Lars Paulsson in London at lpaulsson@bloomberg.net.
To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net; Steve Voss at sev@bloomberg.net
