Choc Finger's Big Bet
Speculators Rediscover Agricultural Commodities
By Susanne Amann and Alexander Jung
With the financial crisis fading into the past, speculation on agricultural commodities markets has returned in force. Food prices are climbing once again as hedge funds rediscover the immense profits that can be made -- led by a British chocolate baron.
Even by the standards of London's exclusive Mayfair neighborhood, businessman Anthony Ward leads a luxurious lifestyle. He and his family live in a 500-square-meter (5,380-square-foot) townhouse with five bedrooms, each with its own bath. There are separate quarters for the staff. When Ward opens a bottle of wine on his veranda in the evening, it's likely that it comes from his own vineyard at the foot of Paardeberg Mountain near Cape Town.
Ward's fabulous wealth comes as a result of his involvement in the cocoa business. The 50-year-old Briton with the nickname "Choc Finger" heads Armajaro, a commodities business and hedge fund he co-founded in 1998. In recent weeks, the hedge fund has caused a furor in the commodities markets. Traders report that Ward has purchased a vast number of futures contracts for the delivery of 241,000 tons of cocoa worth $1 billion (€770 million).
The cocoa represents about 7 percent of annual world production, enough to supply Germany with chocolate for an entire year. It was also enough to substantially drive up prices on the cocoa market. Last week, the price of cocoa climbed to a 33-year high.
What is so unusual about the British investor's coup is that he did not resell the contracts on the London International Financial Futures and Options Exchange (LIFFE) before they expired, but instead took delivery of the beans. As a result, Armajaro now controls almost all the cocoa beans currently stored in registered warehouses in Europe, from Liverpool to Rotterdam to Hamburg. more