One of the hedge fund industry’s most successful energy traders is expanding into London as his firm looks to tap opportunities from the “crazy” European market in the wake of Russia’s invasion of Ukraine.
Bill Perkins, who chalked up $1bn of trading profits at John Arnold’s hedge fund Centaurus Energy Advisors before launching Skylar Capital in Houston a decade ago, has recruited a team who worked together at Glencore to launch a UK office.
Nathan Arentz, formerly Glencore’s head of natural gas and liquefied natural gas trading, Lionel Greene, a derivatives trader who has previously worked at the commodities group, and another analyst are joining the newly formed, UK-based Skylar Energy Advisers, which will trade European gas, power and carbon for Skylar.
Skylar’s move comes as the EU seeks to reduce its dependence on Russian gas and US producers position themselves to supply LNG to fill the gap.
Perkins, also a successful tournament poker player and film producer, said the “crazy” state of the market in Europe meant “we have to understand what’s going on”.
“This is probably the best time to be a natural gas trader,” he added. “Not since I started trading at Centaurus [about 20 years ago] have I seen so much opportunity.”
“Transitions are not smooth,” he said. “You get massive demand, then oversupply, it could continue for the next five years.
Perkins said he was running very low levels of risk in his fund because of uncertainty around the war in Ukraine. But he added that its trading strategy of writing options or selling futures on gas and power had “become a much riskier product” because of the war, with a greater potential to be hit by larger losses.
He expects European gas prices to remain elevated for some time because of Europe’s transition away from Russian gas, presenting more trading opportunities.
Perkins, who began his career in the early 1990s as a trainee to a clerk on the floor of the New York Mercantile Exchange, said he planned to expand the UK office to about 10 to 12 investment professionals and that he had picked London because it was already a hub for energy traders.
Skylar’s expansion comes during a bumper period for funds trading gas, oil and other commodities.
Many commodity-focused funds had shut their doors during the past decade, after finding it hard to make money during years of choppy, and often falling, markets.
But funds that have stayed the course have been able to make large gains in recent years. Perkins’ $430mn-in-assets Skylar Capital, which trades derivatives in natural gas and power, gained more than 100 per cent in 2021 and is up 182 per cent this year, after taking positions in European gas ahead of the recent surge in prices.
Oil trader Pierre Andurand’s $760mn Andurand Commodities Discretionary Enhanced fund, meanwhile, is up 110 per cent in the first six months of this year, according to numbers sent to investors.
Perkins, a keen collector of art by African-American artists, recently hit the headlines after buying “The Sugar Shack” by Ernie Barnes for more than $15mn at auction at Christie’s, smashing the painting’s $150,000 to $200,000 estimate.
He has produced films including Unthinkable starring Samuel L Jackson and The Baytown Outlaws starring Billy Bob Thornton and Eva Longoria. His career earnings from tournament poker are more than $5.4mn, according to website The Hendon Mob.