Are institutions any smarter than individual investors?

“I picked a bad day to quit sniffing glue.”

Today I likely lost the biggest account I have ever had. I did nothing wrong, the fund my client owns is having a volatile but positive year, but they (now likely me) are a victim of institutional and media panic.

The fund is Anglian, the account is $30 million plus and the reason is Amaranth , Vega and the Wall Steet Journal.

Anglian trades in energy derivatives and other commodity markets. Julian, the wily and experienced manager has had a highly volatile year. The fund is supposed to be low volatility. Strike one.

Amarenth blew up earlier this month – not Julian’s fault – but energy guilt by association. Strike 2.

Vega, the back office and marketing partner for Julian and Anglian is now in the news as their flagship fund is reported to be down 25 percent. The Wall Street Journal is fanning the flames implying that Vega has dropped from $12 billion in assets to $3 billion. STRIKE THREE.

Julian has smartly and calmly explained the fund’s positions (see PDF below), but that won’t matter to the institutions. The sell buttons are in full swing.

Anglian Manager Letter.pdf

I am going to have to turn on Adsense!