Autumn has been good to commodities trader and Red Sox principal owner John W. Henry - even after his team won the World Series in October.
Henry's hedge fund trading programs have rallied in the last three months from huge losses that have scared off some clients, according to data released yesterday by his firm, John W. Henry & Co. of Boca Raton, Fla.
It's still a long road back for Henry & Co., which has lost significant amounts of clients' money for the past one-, three-, and five-year periods. But the firm's programs have rallied as government bonds and national currencies have moved in consistent directions, allowing the firm to capitalize on its traditional strategy of betting on trends.
Henry says it's too soon to declare victory. "So much depends on whether or not the dollar and credit issues can be stabilized," Henry wrote in an e-mail yesterday. "We merely follow trends. And long-term trends have reasserted themselves over the past few months. It may well be the case that the incredibly low levels of volatility in financial instruments over the past four years has come to end."
Just like there's no crying in baseball, investing with Henry isn't for the faint of heart. His main business is forecasting the movement of futures contracts, agreements to buy amounts of commodities such as gold or grain, often used as hedges by companies to protect themselves against uncertainty.
Henry's programs can be quite volatile, however, rising or falling 25 percent or more a year on average. Most also require investors to be wealthy enough to handle big losses.
To hear the company tell it, the problem is that in recent years there haven't been obvious trends to bet on. Even accounting for the November gains, his well-known Strategic Allocation program has lost 13 percent of its value annually over the past three years. Henry's largest program, Financial and Metals Portfolio, rose 1.7 percent in November but still is down 13.88 percent for the past year.
Total assets in Henry's programs have declined as a result of the trading losses, as well as withdrawals by clients. Data from Institutional Advisory Services Group, an Illinois consulting company, shows total assets in Financial and Metals falling to $105 million in October from more than $400 million several years ago, for instance. Despite investment gains in November, assets under management dropped 12 percent, to $351 million.
Lately, Henry's best-performing fund has been JWH Global Analytics, whose investments range from agriculture and energy to metals and the movement of foreign stock indexes. It is up 7.6 percent over the past five years and a whopping 18.2 percent for 2007 so far. "We're happy campers," said a fund manager who puts money in the program, Peter Lamoureux, of Everest Asset Management in Fairfield, Iowa.
Lamoureux said the recent performance roughly offsets losses the fund had in 2006. He said he doesn't blame advisers like Merrill Lynch who removed money from Henry's programs as they grew painful. But, he added, "If you're invested with JWH, the bottom line is that you have to be able to wait until they come back. . . . That's the point of being a long-term trend follower."
Kenneth S. Webster, the president of John W. Henry & Co., said a key factor for Global Analytics has been the falling value of the dollar, driving the prices of many commodities to new highs.
But Webster added via e-mail that "trading in currencies continues to be challenging. While our programs have profited from positions in certain currencies, we have suffered from abrupt reversals in emerging markets and nondollar crossrates as investors have quickly abandoned trades and positions that are perceived to be risky during times of uncertainty."
Ross Kerber can be reached at kerber@globe.com.
