Paul Touradji's firmwide reorganization: Full investor letter

September 15, 2011   Josh Friedlander


The commodities trader reorganizes his firm following disappointing performance.

Paul Touradji contacted clients today to inform them that he would be reorganizing his firm in order to spend more time investing and less time managing its operations. Here is his full letter to investors:

September 15, 2011

Dear Clients,

I am pleased to share with you some important organizational changes at Touradji Capital focused on bringing our business infrastructure up to the same standard for which our investment practice has been long recognized. After a thorough examination of our business, including our current and long-term investment results as well as our organizational structure, we have decided to continue our investment process exactly as we have executed it for the last 15 years; it has earned a track record that is among the best over the last decade, and built a real pedigree. At the same time, the organization will be undergoing significant transformational change that every successful business undergoes periodically.

Simply put, the daily operation of the firm must go from being a major time and energy drain on me to an integral support function for our entire team, allowing us to concentrate our full attention on investment performance. To that end, I intend to develop an organization that enables me and my investment team to spend the vast majority of our time on investing, and delegate the day-to-day business and operational activities to a world-class team leading an infrastructure designed to support future growth. I believe doing so will enhance our ability to generate even better returns, as well as take advantage of marketplace opportunities we have been evaluating for some time.

Our main objective for this transformation is to have a business infrastructure that serves the investors flawlessly, is additive to the investment teams' ability to focus on generating returns, and is seamlessly led by people who do not also have the full-time job of portfolio manager. We've been blessed that we've been able to achieve recognition as one of the best performing commodity funds in the business. Investing in our infrastructure is essential to continuing that legacy.

Specifically, while leaving our successful investment team and process unchanged, we will be building a new management organization and culture to support our outstanding research and risk management capabilities. As a first step, we need to bring in fresh leadership. To start that process, our CFO Tom Dwan will be moving on later this month to join another firm. Tom has been an asset and a good friend over the years, and he leaves with our gratitude and good wishes. As we have carefully planned this transition for months, our Controller Ed Min has assumed functional responsibility for Tom's duties under Tom's supervision for months. And Ed will continue in that role while we bring in new organizational talent. We have also commenced a search for world-class leaders to assume additional managerial responsibilities, including senior business leadership. Sang Lee will assist during this time to ensure a smooth transition period before his planned departure in the future.

We decided to announce these changes transparently to assure that the recruitment process can proceed in an orderly way and result in our bringing in the best talent for Touradji Capital's next phase of development.

I look forward to leading our investment team unencumbered by the demands of also managing our business infrastructure. My greatest strength is as an investor and our results bear this out. While no one is pleased with this year's results, our long-term record continues to be superb. Our total gross return in the 2005-2010 period is 250%, compared to the GSCI total gross return of -12%, the S&P of 6% and the HFR Global Hedge Fund Index of 8%. We have generated these returns with much lower drawdown than all of the indices and we are proud of our ability to preserve capital in 2008.

Our focus is on doing the smartest things for the long term. We nevertheless know certain investors don't like change, and we wish to give everyone the comfort of full flexibility. As a sign of confidence in the advantages of our investment capabilities and in the benefits that our infrastructure transformation will create, we will accommodate any investor who would like to sit on the sidelines in the short term, without impediment from any lockup; just call us and we will hope to welcome you back again soon.

The decision to address our business infrastructure needs and upgrade our capabilities will allow me and our talented investment team to focus on investing with fewer distractions. The investment team is on board and with me on this next step of our firm's development and equally as enthusiastic as I am. I am extremely optimistic about the future of the firm and excited about our numerous opportunities.

Thank you for your support and I look forward to our continued success.

Sincerely,

Paul Touradji



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