Natural Gas Hedge Fund Crash Costs Investors Millions

Your money is gone. That’s what natural gas hedge fund investor James Cordier struggled to admit to clients in his 10-minute, 20-second apology video posted to YouTube in November. Cordier, who appears to be holding back tears across the video’s runtime, finally concedes at the 6:40 mark, a “rogue wave that I was unable to navigate has likely cost me my hedge fund.”

The “rogue wave” to which he refers is the natural gas price spike that occurred in early November when prices jumped to their highest mark in eight years. The price spike has been attributed to falling oil prices, colder-than-expected weather forecasts and record-low natural gas inventories. On November 15, around the same time Cordier posted his video, the U.S. Energy Information Administration, said in its TODAY IN ENERGY column that natural gas stocks had ended the refill season at their “lowest level in 13 years.”

The website of Cordier’s hedge fund, optionsellers.com, has recently “gone dark,” with all of its content being replaced by a single page containing just the company’s contact info: a Tampa, Florida suite address, two phone numbers and an “office@” email. However, an October 12, 2018 snapshot of the site captured by the Internet Archive’s Wayback Machine shows that OptionSellers.com billed itself as “The Global Authority on Selling Options.” According to the site, Cordier founded OptionSellers.com in 1999, and the hedge fund “achieved notoriety for its unique method of collecting option premiums.” He’d dubbed this method “FUDOM,” which stood for “FUndamentals combined with Deep Out of the Money options.”

A lawyer who claims to have been contacted by 60 clients of OptionSellers.com since the video was posted says that losses resulting from the hedge fund calamity might exceed $150 million. Making matters worse, the OptionSellers.com clients might now actually owe money to INTL FCStone Inc., the brokerage that had cleared the hedge fund’s trades. It is unknown how many people have been affected either directly or indirectly. Tampa Bay Lightning owner Jeff Vinik was one of Cordier’s clients, according to a report by the Tampa Bay Times.

The apology video was so remarkable, both in emotional content and subject matter, that it attracted the attention of virtually all of the major financial publications, as well as numerous other news outlets. Bloomberg likened it to a “hostage video,” presumably for its minimal production value. In the video, Cordier sits in a leather chair at an almost-empty desk, his arms folded before him, a blacked out wall in the background. He takes long pauses within and between each statement, many of which are in keeping with the sailor’s “wave” analogy. He closes saying: “I am so sorry for not managing our ship and keeping her afloat. I bid you great luck and good health, and please feel free to call our office if you ever want to speak to any one of us. Thank you and be well in good health.”
Apparently, fair winds and following seas are off the table for the foreseeable future.

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