With oil trading around $60 a barrel and energy stocks booming, it might be hard to imagine a hedge fund that focuses on energy going bust. But that's what has happened to
Enchanted Rock Capital
The Houston-based fund, which at one point had more than $150 million in assets, shut its doors last week after nine months of operation, sources say. A person at Enchanted Rock confirmed that the fund is closing but declined to comment further.
A person familiar with the troubles at Enchanted said it had made several bad bets on oil.
The demise of Enchanted is a blow for Thomas McAndrew, the former head of trading for
and a well-known energy industry veteran. McAndrew joined the California power company in 2000 to help it get into the commodity and gas trading business.
He left Calpine in 2003 as the business of energy trading fell into disfavor after the
scandal. In fact, McAndrew, a nuclear engineer by training, first honed his skills as a trader at Enron.
After leaving Calpine, McAndrew began trading commodities and futures for his own account, according to a September 2003 article by the
Dow Jones News Service
. Last November, he decided to get into the $1 trillion hedge fund business.
People familiar with Enchanted Rock, which was named after a famous Texas state park, says the hedge fund had a slow beginning, raising just $5 million during its first few months of existence. But the fund began to take take off after McAndrew persuaded
, one of the largest energy trading funds, to invest $15 million into Enchanted, people say.
The investment from Centaurus, a Houston-based fund founded by a group of former Enron traders, was seen by other investors as a seal of approval for Enchanted. Within a couple of months, Enchanted reportedly had taken in $100 million of additional funds.
Officials with Centarurus declined to comment.
The wheels fell off last week, when investors were notified by letter that the fund was shutting down.
It's not clear how much money remains in Enchanted.