Clarium Declines 13% in August, Biggest Monthly Loss (Update1)

By Saijel Kishan

Sept. 5 (Bloomberg) — Clarium Capital Management LLC, the $7 billion hedge-fund firm founded by Peter Thiel, fell about 13 percent in August, its biggest monthly loss, as it bet against the U.S. dollar.

The decline cuts the total return this year from the firm’s Clarium LP fund to 27.6 percent, according to estimates given to investors. Hedge funds worldwide fell 1.28 percent last month, extending their loss through August to 5.05 percent, according to Hedge Fund Research Inc.’s HFRX Global Hedge Fund Index.

“Clarium is a rather aggressive fund, so even if these returns are disappointing, they’re in line with what investors should reasonably expect,” said Luc Estenne, chief executive officer of Geneva-based Partners Advisers SA, which advises clients on investing in hedge funds.

Clarium wagered last month that foreign currencies would gain against the dollar. The U.S. Dollar Index rose 5.67 percent in August. The euro had its biggest drop in eight years on Aug. 8 after traders became convinced the European Central Bank wouldn’t raise interest rates because the economy was slowing.

Armel Leslie, a spokesman for the fund, declined to comment. Thiel started San Francisco-based Clarium in 2002 after selling online-payments service PayPal, which he co-founded, to EBay Inc. for $1.5 billion.

As a macro hedge fund, Clarium seeks to profit from broad economic trends by trading stocks, bonds, currencies and commodities. Macro hedge funds have been the year’s best performers, gaining an average of 3.7 percent through July, according to Chicago-based Hedge Fund Research.

Last Big Loss

Before August, Clarium’s biggest monthly loss was in March 2004 when it fell 11.4 percent, according to an investor letter. The HFRI Macro Index had returned 1.12 percent that month.

Clarium as recently as Aug. 1 borrowed $4.60 for every $1 of capital, yet now it is using no borrowed money and is investing just 36 percent of his assets, according to the update given to investors.

Thiel, 40, graduated from Stanford University with a degree in philosophy and earned a J.D. from Stanford Law School. He practiced law with New York-based Sullivan & Cromwell LLP, and first traded securities at CS Financial Products.

Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising asset prices and participate substantially in profits from money invested.

Clarium isn’t alone in losing money last month. Ospraie Management LLC, the New York-based commodities-hedge-fund firm run by Dwight Anderson, closed its flagship fund after it fell 27 percent in August, extending its annual loss to 39 percent.

To contact the reporter on this story: Saijel Kishan in New York at

Last Updated: September 5, 2008 16:50 EDT