Impala prepares hedge fund to bet on commodity rebound

By Lawrence Delevingne

NEW YORK (Reuters) - Impala Asset Management is forming a new hedge fund to bet on rising commodities prices, according to a letter sent to clients and seen by Reuters on Thursday.

Impala, a $2 billion stock-focused hedge fund manager based in New Canaan, Connecticut, plans to launch the Impala Resource Fund on August 1 with no more than $125 million, according to the note, which was sent out to clients on Wednesday.

Impala leader Bob Bishop expects that there will be an 18 month to 36 month “cyclical commodity rally” and believes the “timing of this opportunity is very soon” according to the note.

The launch comes amid a punishing rout in commodity prices because of slowing growth in China. The price of U.S. crude oil has lost more than half its value, copper is down about 30 percent and natgas has dropped by 60 percent over the past two years.

The average hedge fund with an energy-biased strategy rose by just 0.4 percent in the five months through May, after losing 1 percent in 2015, according to figures compiled by Chicago-based Hedge Fund Research.

The Impala fund will invest in commodities directly and the stocks of mining, energy and industrial companies who benefit from higher commodity prices, according to a person familiar with the fund who was not permitted to speak publicly.

Copper, iron ore, zinc and lumber were all favored by Impala now, the person added.

The fund will be "substantially net long," according to the letter, meaning it will carry additional risk by not using substantial market hedges.

Bishop started Impala in late 2003 after stints at large hedge fund firms including Tiger Management and Soros Fund Management.

Impala’s main fund that bets both for and against stocks gained 8.1 percent this year through June, according to the letter. Commodity-related equity stock investments for the firm include Rio Tinto, Teck Resources and Newmont Mining Corp, according to a U.S. Securities and Exchange Commission filing for holdings as of March 31.

(Reporting by Lawrence Delevingne; editing by Carmel Crimmins and Grant McCool)

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