A former U.S. special-operations soldier turned math wonk is shaking up the world of commodity trading.
Since leading a management takeover at Castleton Commodities International LLC almost three years ago, Chief Executive Officer William Reed has been on a buying spree backed by the family offices of hedge fund managers and billionaires. Two months after acquiring Morgan Stanley’s oil business, Reed has made Castleton among the world’s biggest independent energy traders.
What distinguishes Castleton are the deep pockets of shareholders such as Paul Tudor Jones and Highbridge Capital Management founder Glenn Dubin. They gave Reed the funding he needed to make the Connecticut company global, with profits close to those of some of the biggest independent traders including Gunvor Group Ltd. and Mercuria Energy Group Ltd.
“Castleton is the new model of commodity trading,” said Craig Pirrong, a finance professor at the University of Houston. “They have the advantages of a private firm but with the ability of accessing lots of capital easily.”
Reed, 49, who started in the business as a junior trader of natural gas and electricity for Enron Corp. in the 1990s, put Castleton’s money to work buying power plants in Texas, coal terminals in Kentucky, oil storage tanks in Shanghai and natural-gas wells in Colorado. He capped off the dealmaking with Project Horizon: the codename for the acquisition of Morgan Stanley’s oil-trading business.