Anthony Ward’s $1 Billion Bet on Cocoa (HSY)

Producers and retailers of chocolate products, such as Hershey Co. HSY, have been riding higher on the coattails of Anthony Ward for the past few months. Ward, a hedge fund manager, has been buying up cocoa futures and stockpiling the commodity for months now, driving up prices in the process. Through his private investment firm, Armajaro, he now controls a cache equal to 7 percent of annual cocoa production worldwide. His activities have helped drive cocoa prices on the London market to a 30-year high. This looks to be a 1930’s style corner. Given that he has actually taken delivery of the commodity, though, he is in an even trickier place from a money-management perspective. In a typical futures trade/corner, a manager will buy up all the respective contracts on the commodity; if they need to sell them for any reason, it is much easier, given that the contracts are liquid. Having to sell the equivalent of 5 billion chocolate bars is terribly harder. Anthony Ward is no schmuck, though. A former Armajaro executive said this about the man, “Globally, he is unmatched in his knowledge of cocoa.” For the entire story, please visit… http://www.nytimes.com/2010/07/25/business/global/25chocolate.html?_r=2