Getting More Than You Bargained For

Whenever we try to explain our industry to the uninitiated (usually with copious references to the movie Trading Places), we usually get asked some variation of “So if I buy a corn contract, will a truck full of corn show up at my door one day?”

We have to explain that, no, trading futures contracts doesn’t necessarily mean taking possession of the underlying commodity – but we bet that’s probably similar to what the folks over at Elliott Management’s NML Capital thought when they bought Argentine government bonds at bargain-basement prices back in 2001. They’ve been fighting Argentina for their full claim ever since the government defaulted on its debt obligations, but now they’ve wound up with a rather unusual bit of collateral on their hands:

An Argentina naval vessel impounded at a hedge fund’s behest still can’t leave Ghana, but most of its crew can.

Most of the 326 people aboard the Argentine navy’s flagship, the ARA Libertad, are to leave the ship and the West African country, where they have been stuck since the beginning of the month. Argentina has chartered an Air France flight to bring some 281 crew members, primarily navy cadets, back to Argentina, choosing the French carrier reportedly because it feared its own planes could be seized themselves upon arrival in Ghana.

The Libertad will remain in the hands of a skeleton crew and its captain and Argentina seeks to win its release while refusing to give in to Elliott Management, which won the seizure through an affiliate.

For what it’s worth, it appears to be a pretty nice boat, but it’s definitely not what NML capital was hoping for. In this case, they’re really just holding the boat hostage in hopes of getting some of the money they hoped to make on the trade, but it got us thinking… what would happen if some of the big traders in the futures markets woke up one day to find that they had come into possession of the underlying commodities that their contracts represented?

Just imagine rolling out of bed one morning to find you had accidentally taken delivery on your corn contracts:

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

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