One of the Newest Program Managers at Hehmeyer Capital Management
Andrew Jarmolkiewicz, a niche commodities trader located in the Bahamas, recently joined the Hehmeyer Capital Management portfolio of program managers. We sat down with him to learn more about his background, why he was attracted to soft commodities and how his trading strategy has changed throughout his career.
Trading Subprime Mortgages Through the Financial Crisis
“I started my career analyzing and structuring subprime mortgages and later started trading them,” Jarmolkiewicz said about the beginning of his career. “There is a natural progression of wanting to trade the products once you understand them.”
Jarmolkiewicz worked and traded subprime mortgages for about 13 years spending time at Merrill Lynch, Deutsche Bank and then co-founding Cairn Capital, a hedge fund focused on the credit markets.
“I traded through the financial crisis but after the market became less interesting to me and I wanted to focus more on soft commodities,” he said.
Looking for more work life balance, Jarmolkiewicz left the UK and moved his family to Nassau Island in the Bahamas in 2010.
Nassau: A Traders Paradise
“I wanted to go in a new direction career wise and was keen to live in an environment that was good for work and family,” he said. “Here I could go to the beach with my kids after work because there is no commute time.”
Jarmolkiewicz says the island is similar to a little country village with a surprising amount of systemic and algorithmic traders.
“There is a great community of trading talent here and some of the biggest names in trading reside on the island. You aren’t in the middle of nowhere, if you want to get a beer and talk trading, you can find a market expert,” he said. “I was in Chicago for FIA Expo and was surprised to hear how many traders were at one point stationed in Nassau.“
He also said that everyone knows everyone on Nassau Island.
“This is an interesting neighborhood with a 1980’s upbringing feel,” he said. “Kids are riding their bikes after school or out on a canoe with their buddies. “
A Pivot Into Coffee
Jarmolkiewicz has been living in Nassau for the past 8 years trading coffee futures with a former colleague from London
“We trade a bit in the sugar and cocoa markets and very occasionally cotton but we love the coffee market in particular because it is so fragmented,” he said. “It is unlike any other market in that no group of traders has cornered this market, especially on the production side.”
Besides there being no informational monopolies, Jarmolkiewicz sees long term potential in coffee trading.
“The potential is enormous because the market is likely facing supply challenges,” he said. “It is also a tropical commodity and a difficult commodity to expand supply in rapidly.”
He believes there are other facets that impact the coffee markets.
“Coffee is impacted by climate and disease,” he said. “Macro is an important factor as well as currencies, weather and information. Over time you acquire experience and knowledge, which shows itself in the trading.”
He said that there have also been political challenges that influence coffee prices.
“In the past year, we have seen a lot of political challenges in Brazil and that impacts their currency as well as the coffee market in particular,” he said. “The weakening currency has been a driving factor in the volatility of the market and price movements. “
Fundamental Trading Strategies and Efficient Risk Management
“We’ve taken a fundamental approach to trading and do our own research,” said Jarmolkiewicz. “However in recent years we’ve had to incorporate other things into our strategies like technicals.”
He said that system traders have become a bigger part of the markets and he has had to take into consideration such things as macro, currencies as well as the inflows and outflows of commodity market investors.
“Focusing on fundamentals alone would be insufficient and I think our track record shows we are efficient risk managers.”
Hehmeyer Trading + Investment thinks so too with WestCay LLC being one of the newest members to join the family of program managers under the Hehmeyer Capital Management, LLC arm. For more information about WestCay’s performance and other programs, please register on our website www.hehmeyer.com to view our Investment Platform.