PayPal’s Thiel Scores 230% Gain With Soros-Style Fund

…Thiel is a proponent of a geologic theory known as peak oil, which holds that global oil production is now at or near its apex. Among his picks was Calgary-based EnCana Corp., which wrings oil from the tar sands of Canada. EnCana stock rose 54 percent in 2005.

Clarium has taken some hits along the way. Three times, Thiel has lost as much as 11 percent in a month. This past September, as the Dow Jones Industrial Average marched toward an all- time high, Thiel read a decline in U.S. new home sales as a sign that his forecast for the U.S. economy was coming true. He bet that the Russell 2000 Index would decline. Instead of slumping, the index kept rising. By the second week of October, Thiel exited the trade after hitting a stop-loss limit. Thiel was down 5.2 percent for the year through Nov. 3.

“Thiel can be a scary guy if he’s the only one in your portfolio,” says David Philipp, a Clarium investor and managing partner at San Francisco-based Gyre Capital Management LLC. “He’s not afraid to put his money where his convictions are, and he’s not the guy who’s happy with 5 percent returns and 3 percent volatility.”

Thiel has even more riding on Clarium than most of his clients. He says he’s invested his entire liquid net worth in his fund. Unlike most hedge fund managers, Thiel doesn’t charge his customers an annual management fee. Instead, he pockets 25 percent of Clarium’s trading gains. Hedge fund managers typically charge a 2 percent annual fee and take a 20 percent cut of profits.

Bloomberg