"The second half of 2012 is going to be fantastic," Haugerud says, adding that Galtere still holds options to gain from corn prices. "I better knock on wood," she adds, jumping up to tap her desk. "I've had a breakout year every five to 10 years, and my last one was in 2002. I'd better knock on wood again."

Haugerud has good reasons not to tempt fate. After a disastrous 2011 that saw her Galtere International Master Fund fall 10.4%, her corn bet is yielding profits. Galtere gained 5.3% in July, more than double the 2% for the Newedge Commodity Trading Index, which monitors hedge funds that trade in agricultural and other commodities. The fund was up 0.5% in August.
The fund's returns have averaged 11% a year since 1999, topping 4.9% for the HFRX Global Hedge Fund Index compiled by Hedge Fund Research Inc. Through the end of August, Galtere was up 9.3% in 2012.

Although Galtere invests in equity, bond and currency markets, commodities underpin Haugerud's decisions.
"We have a commodity lens through which we view every trade," she says. Last year, she shorted Chile's peso when she thought copper was heading lower. Copper futures fell 20% in the second half.

Haugerud is unique in the world of commodities-focused hedge funds-a woman from a Midwestern farm whose $600 million hedge fund is beating some of Wall Street's top players. Female managers oversee just 3% of the $2 trillion in hedge-fund assets, according to HFR.

Tricky Business
Commodities have proved a tricky business recently. Concerns over China's growth, Europe's economy and Iran's nuclear ambitions have made predicting price swings tougher.

Clive Capital LLP, a $3.3 billion London hedge fund that invests in oil, currencies and farm commodities, lost 3% in July. Fortress Investment Group LLC said in May it would close its $500 million commodities fund after shedding almost 13% in four months amid bets on oil and metals. BlueGold Capital Management LLP, which soared 200% in 2008 on rising oil prices, closed in April after tumbling 34% last year.

"Fundamental analysis doesn't always work because of the political environment," says Marcus Storr, head of hedge funds at Bad Homburg, Germany-based Feri Trust GmbH, which manages about $20 billion.

Arpad Busson, chairman of EIM SA, a fund-of-funds firm in Nyon, Switzerland, says Haugerud's 30 years of trading commodities and currencies help her overcome setbacks.

"She has strong stamina and does deep homework," says Busson, who met Haugerud in the mid-1990s and invests with her. "She has the kind of experience in commodities that very few people have."

Haugerud says commodities, especially agricultural products, will outperform stocks and bonds during the next two decades.
In today's economic climate, which she calls "inverse stagflation," interest rates are low and money is plentiful, yet growth is anemic. Commodity prices had tripled as of the end of July since 1982, while stocks had soared 11-fold. Now, she predicts commodities and real assets like farmland will appreciate while stocks and bonds stagnate. Corporations won't be able to pass rising costs to consumers, which will hurt share prices.