Centaurus’ Arnold Poised for Worst Year Ever

Centaurus Energy’s John Arnold is poised to suffer by far his worst year since launching his roughly $5 billion hedge fund eight years ago.

The super secretive former Enron energy trader is actually losing money this year; he was down 2.7 percent through October despite a 7.9 percent gain that month, according to knowledgeable sources.

Little is known how the Houston-based natural gas trader has fared since then or what trades have not been working for him.

Natural gas prices have been on a tear for the past few months as a cold snap has gripped the country. Prices recently hit an 8- or 9-month high.

Arnold might have been long in October, and if he stayed with that position, probably managed to move into the black by the end of November. Arnold declined to comment.

Arnold joined Enron in 1995 after graduating in three years from Vanderbilt University with a B.A. in science. He launched Centaurus in 2002 with the $8 million bonus he received from Enron after making the firm $750 million.

He quickly attracted attention when he posted a 160 percent return in 2005 and 200 percent in 2006. In 2007 and 2008 he was up another 50 percent or so in each of the years. In 2009, he was only up 29.2 percent.

Last year, he stepped out from the shadows to testify in Washington, DC, arguing against The Commodities Futures Trading Commission’s proposed restrictions on position limits. "If allowed to take effect as currently structured, the new [position limits] will have a range of detrimental effects on the market," he reportedly stated in a rare public appearance. However, he does support limits on trading in NYMEX physical delivery contracts.

> Arnold has certainly given back a fair amount of his wealth. He recently pledged to give a majority of his wealth to charity under the “Giving Pledge” program, the brainchild of Warren Buffett and Bill and Melinda Gates.

“We look upon our financial position with a mix of disbelief and humility, never having dreamed that we would be in this situation,” he wrote in a letter published on the website announcing the participation in the pledge. He stressed the couple’s solid middle-class upbringing and noted they both attended public secondary school and worked their way through private universities. “And, of course, we dreamed of one day being ‘rich,’ in the way that all young people fantasize about having everything they want,” he went on to write.

He and his wife Laura have given large amounts of money to Houston-based KIPP Foundation (Knowledge Is Power Program), a national charter school network focused on high-need areas, having earlier pledged $10 million as part of a campaign to support future growth.

Several years ago, Arnold built a 20,000-sq.-ft. home in the tony River Oaks section of Houston, next door to a house museum controlled by The Museum of Fine Arts. Preservationists were upset when Arnold knocked down the prior structure, a renovated 1926 home, which he bought four years ago.