Farm prices will jump further as genetic engineering, irrigation and fertilizers fail to replenish overused land. “Productivity in yield enhancement is coming to an end,” she says.
In the United States, fewer young people are taking up the plow just as Brazil, Turkey and Indonesia consume more food. “That will put pressure on agricultural prices,” she says.
Haugerud grew up amid the farms and forests of Fillmore County, Minn., rising before dawn to feed the cattle. Her father, Neil, was sheriff, and their home doubled as the jail. Young Renee helped serve breakfast to the prisoners in the rear of the house.
When she was 5, her dad took her in a single-engine plane to check cornfields, explaining how investors could sell corn on a futures exchange without actually owning it. “I was mesmerized,” she recalls.
Haugerud headed to the University of Montana for a forestry degree. After graduation in 1980, she became a trader at Minnesota commodities giant Cargill. Genesis Capital Fund, a hedge fund based in Fairfield, Iowa, headhunted her in 1993 to run proprietary trading. She moved to Hong Kong two years later with Britain’s NatWest Markets.
Longing for her own company, she put up $5 million in 1997 to found Galtere, a name she invented to convey “pragmatic simplicity.”
Galtere climbed 61 percent in 2002, Haugerud’s breakout year. Gold futures rose 25 percent, and she shorted the S&P 500, which fell 24 percent. The company, however, had only $12 million in assets and couldn’t attract investors.
“There is a subliminal feeling, which I don’t agree with, that women won’t lose you money but won’t be able to make you big money,” she says.
Haugerud approached Cargill’s hedge fund, Black River Asset Management, run by former boss Gary Jarrett. Cargill invested $60 million, and Black River took a 49 percent stake in 2003.
“The minute Cargill said they’d invested in me, ka-ching, ka-ching, and the money started pouring in,” she says. When Black River offered to buy the rest, Haugerud and investors instead bought back Black River’s stake.
“She’s very entrepreneurial and didn’t want to work in a corporate environment,” Jarrett says.
Galtere’s assets soared to $2.4 billion before Haugerud suffered through three down years. The flagship fund fell 1.7 percent in 2008 and 0.1 percent in 2009. In 2011, her wager on resource-rich nations backfired. In one instance, Haugerud bought the Brazilian real and Mexican peso and sold the dollar, calculating that those nations would grow faster than the United States. Instead, Greek debt buffeted Europe, the dollar rose and commodities fell.
“We got the big picture wrong,” Haugerud says.
Her strategy to manage risk forced her to close trades after 2 percent losses. “Even though I traded for 30 years, it depressed me,” she says.
Haugerud’s second fund, Galtere Ultra, convinced her to keep going. Ultra makes the same bets as the flagship but tolerates more risks. As of the end of July, the fund was up 43 percent since its inception in October 2008.
“There’s a science of trading and an art of trading,” she says. “The science of trading ponders the past; the art of trading focuses on the future. In a good hedge fund, you need both.”
The full version of this Bloomberg Markets article is in the magazine’s October issue.
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