q What is the asset class and geography that you are focused on?
a We primarily focus on commodities. In
For the firm, we'd rather do the short term. We do this for hedging. For traditional stocks, macroeconomic and company fundamentals will be sufficient. But for commodities, there are fundamental supply and demand factors, the currency situation, the weather situation – everything matters for agricultural commodities.
Early 2013 was a very bad year, with rising production across the segments. There are a lot of huge surpluses, and all the stockpiles are very high. The weather has been very, very good. In sugar, there has been a surplus for almost two or three years now. The natural oils and the agricultural commodities will have to struggle primarily because of the rising agricultural production and also because of the tapering that the federal reserve has been doing. Anything to do with dollars will obviously affect these commodities.
What are the main risks to that outlook?
Weather has a major, major effect. Also currency risk, like what happened the other day in
What was the best investment you were involved in?
In sugar, when there was a fire in a port in
What was the worst?
There are a few. When the coffee prices were continuously coming down last year, we thought OK, enough is enough, they're not going to come down further, they're already at a seven-year low. We bought more. Obviously we were wrong and we had to sell and cut our losses. When we go wrong, the smart people exit, they don't hold on to it.
What is the best investment at the moment?
We are advising all of our investors to go long on coffee and also go long on sugar. The current prices are below the cost of production for coffee. For sugar, even though there is a surplus of supply, we still think it is very positive because the global economy seems to be improving.
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