One item got little play in numerous stories about The Carlyle Group's investment in commodity player Vermillion Asset Management:
Today, Vermillion manages three commodities-focused strategies, including relative value, enhanced index and long-biased physical commodities. Each strategy utilizes Vermillion’s ability to make and take physical delivery, unique among its peer group.Vermillion doesn't just sell commodity contracts/derivative bets. It can physically hold commodities. We've already heard about the European bacon shortage predicted for 2013. Will Carlyle go for pork bellies via Vermillion?
Carlyle co-founder William Conway hates a level playing field. How will Carlyle/Vermillion tilt the commodity field in its favor?
The good part, William, is that, no matter whether our clients make money or lose money, Duke & Duke get the commissions.
Take the "million" out of Vermillion and substitute "min." That spells vermin, which leads to the rat portion of Carlyle's growth. Vermillion has $2.2 billion in commodity assets under management. Carlyle wouldn't add TCW's $127 billion in assets to Carlyle's $156 billion. Add the three together and it totals $285.2 billion under management. How might Carlyle's financial muscle corner commodities? Stay tuned.