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Monday, 17 July 2017

Former US$2 billion private equity fund now nearly worthless: WSJ

CW8888: It is extremely hard to look far into the future! Then in 2013; the forecast of oil price into $150 and above

Wells Fargo and a number of other lenders are negotiating to take control of a hedge fund previously valued at more than US$2 billion that is now worth close to nothing, according to a report from the Wall Street Journal.

REUTERS: Wells Fargo and a number of other lenders are negotiating to take control of a hedge fund previously valued at more than US$2 billion that is now worth close to nothing, according to a report from the Wall Street Journal.

EnerVest Ltd., a Houston private equity firm that focuses on energy investments, manages the private equity fund that focused on oil investments. The fund will leave clients, including major pensions, endowments and charitable foundations, with at most pennies on the dollar, WSJ reported.

The firm raised and started investing money beginning in 2013 when oil was trading at around US$90 a barrel and added US$1.3 billion of borrowed money to boost its buying power. West Texas Intermediate crude prices closed at US$46.54 a barrel on Friday.

"We are not proud of the result," John Walker, EnerVest's co-founder and chief executive, wrote in an email to the Journal.

Only seven private-equity funds worth more than US$1 billion have ever lost money for investors, according to data from investment firm Cambridge Associates LLC cited in the report. Among those of any size to end in the red, losses greater than around 25 percent are extremely rare, though there are several energy-focused funds in danger of doing so, according to public pension records.

Clients included the J. Paul Getty Trust, John D. and Catherine T. MacArthur and Fletcher Jones foundations, which each invested millions in the fund, according to their tax filings, the Journal reported. Michigan State University and a foundation that supports Arizona State University also disclosed investments in the fund.

The Orange County Employees Retirement System was also an investors and has reportedly marked the value of its investment down to zero.


  1. CW,

    GIC and Temasek also got invest in private equity.

    Touch wood. So far so good. Made money in most of them ;)

    I guess looking back, its good I got Jurong Tech to make me realise that stocks can and will go to ZERO...


    Yeah, now I can laugh. I wasn't laughing back then :(

    Optimise is good enough. Maximise returns are for youth who don't know what cannot be done :)

    Like taking on margin leverage to maximise dividend income 8 years into a bull market!?


    1. "Optimise is good enough"

      Which i am sure "Lau Cheow" in the market always try to do.

      i am finding even to optimise my capital is not an easy thing to do.

      i only pray that i don't lose but make some money somehow - over-all.

      Happy liu!

    2. Latest known asset allocation for GIC shows 9% private equity. As for Temasek, it's a whopping 40% (unlisted assets) of it's entire S$275B portfolio.

      Hey, who dares wins, right?? Kekekeke!!!

      As quoted from the latest Temasek Review 2017, they are predicting Low market volatility for the next 1 year till 31st March 2018 with ho-hum returns:-

      "Looking to the immediate future, we use Monte Carlo simulation based on past market data to gain a sense of the likelihood of a range of returns at the end of the next 12 months.

      Applied to the current Temasek portfolio mix, our Monte Carlo simulation shows a five-in-six chance that our one-year portfolio returns can range from -11% to +14%. This is within the average simulated portfolio returns over the last 10 years of -18% to +31%."

      Narrow volatility curve means no bubble yet, similar to 2006 prediction?!?!?!
      Need to see widening of curve to at least Medium volatility like 2007 prediction before got chance of recession / crash?!?!?!?

      Hohohoho!!!! Your guess as good as mine!! Kekekeke!!!

      Do note that Monte Carlo is backwards looking, using past market data to generate simulations.

  2. Ok looks like they were super optimistic & even took on >100% margin to juice returns.

    But their risk management & loss mgmt & hedging really sucks.

    The extent of the losses make it look like totally professional incompetence & negligence. This kind of total wipeout is more for retail and amateur traders, not from people who are supposed to be oil experts & finance/investment experts.

    Being USA, expect to see class action lawsuits against EnerVest...


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