Hedge Fund Sees 31% Gain From Oil-Stock Bet Before Prices Surged

Core Insights - Old West Investment Management made a significant investment in energy stocks when oil was priced around $60 per barrel, anticipating a potential crisis in the Middle East [1] - By the end of February, the firm's flagship fund achieved a 31% return, driven by unexpected factors related to geopolitical events [2][4] - The firm's chief investment officer noted the importance of scarce resources highlighted by recent events, indicating a strategic pivot towards energy stocks [3] Investment Strategy - Old West increased its energy-stock exposure from single digits to over 30% of its holdings, contrary to industry expectations of falling oil prices due to new supply and slowing demand [4] - The decision was validated as oil prices surged due to geopolitical tensions, including U.S. actions against Venezuela and Iran, leading to prices exceeding $110 per barrel [5] Performance Comparison - The hedge fund's returns have surpassed those of larger, well-known peers, achieving returns that outpaced Pierre Andurand's hedge fund at 19% and RCMA Capital's Merchant Commodity Fund at around 20% [7][8] - Old West's performance also eclipsed major multi-strategy funds, such as Citadel's Wellington with a 2.9% return and Balyasny Asset Management's Atlas Enhanced fund at 0.4% [8]