Nestor Partners Swings to $3.77M Loss Amid Derivative Market Volatility

TL;DR

**Nestor Partners is bleeding cash, with a massive swing to a $3.77 million net loss driven by bad derivative bets, making it a risky play for investors.**

AI Summary

Nestor Partners reported a significant net loss of $3,768,123 for the nine months ended September 30, 2025, a stark reversal from the net income of $5,784,681 reported in the same period of 2024. This decline was primarily driven by net realized and unrealized losses on futures and forward currency contracts, totaling $(5,229,935) realized losses and $(257,988) unrealized losses in 2025, compared to realized gains of $1,620,160 and unrealized gains of $1,567,801 in 2024. Total assets decreased to $109,248,941 at September 30, 2025, from $116,053,316 at December 31, 2024, while partners' capital also fell from $114,588,861 to $107,143,649 over the same period. Interest income, net, also saw a decrease, falling to $3,592,962 for the nine months ended September 30, 2025, from $4,695,181 in the prior year. The firm's investment strategy heavily relies on U.S. Treasury notes and derivative contracts, with U.S. Treasury notes comprising $103,197,220 of total investments at September 30, 2025.

Why It Matters

Nestor Partners' substantial swing from a $5.78 million net income to a $3.77 million net loss in just one year signals significant challenges in its trading strategies, particularly within futures and forward currency markets. For investors, this indicates heightened risk and potential instability in returns, especially given the firm's reliance on U.S. Treasury notes and derivatives. Employees might face uncertainty if these losses persist, impacting compensation or job security. Customers, primarily limited and special limited partners, are directly affected by the decline in partners' capital, which fell by over $7.4 million. In the broader market, this performance highlights the inherent volatility and risks associated with derivative-heavy investment strategies, potentially influencing how other investment companies manage similar portfolios.

Risk Assessment

Risk Level: high — The risk level is high due to the significant net loss of $3,768,123 for the nine months ended September 30, 2025, a dramatic reversal from a $5,784,681 net income in the prior year. This loss is primarily attributed to net realized losses on futures and forward currency contracts of $(5,229,935), indicating substantial trading underperformance and exposure to volatile markets.

Analyst Insight

Investors should exercise extreme caution and consider divesting from Nestor Partners given the substantial net loss and significant negative returns from derivative trading. A thorough review of the firm's risk management practices and future strategy is warranted before any further capital commitment.

Financial Highlights

total Assets

$ 109,248,941

net Income

$ (3,768,123)

cash Position

$ 2,554,305

Key Numbers

• $3.77M — Net Loss (For the nine months ended September 30, 2025, a significant reversal from $5.78M net income in 2024.)
• $(5.23M) — Net Realized Losses on Derivatives (On futures and forward currency contracts for the nine months ended September 30, 2025, a key driver of the net loss.)
• $109.25M — Total Assets (At September 30, 2025, down from $116.05M at December 31, 2024.)
• $107.14M — Partners' Capital (At September 30, 2025, a decrease from $114.59M at December 31, 2024.)
• $3.59M — Net Interest Income (For the nine months ended September 30, 2025, a decrease from $4.70M in 2024.)
• 0.41% — Limited Partners Net Investment Income Ratio (Annualized for the nine months ended September 30, 2025, down from 1.14% in 2024.)
• (4.69%) — Limited Partners Total Return (After profit share allocation for the nine months ended September 30, 2025, a significant drop from 3.23% in 2024.)
• $103.20M — Investments in U.S. Treasury Notes (At fair value as of September 30, 2025, representing a substantial portion of total assets.)

Key Players & Entities

• Nestor Partners (company) — Registrant and investment company
• Millburn Ridgefield LLC (company) — General Partner of Nestor Partners
• Securities and Exchange Commission (regulator) — Filing recipient
• $3,768,123 (dollar_amount) — Net loss for the nine months ended September 30, 2025
• $5,784,681 (dollar_amount) — Net income for the nine months ended September 30, 2024
• $109,248,941 (dollar_amount) — Total assets at September 30, 2025
• $116,053,316 (dollar_amount) — Total assets at December 31, 2024
• $107,143,649 (dollar_amount) — Partners' capital at September 30, 2025
• $114,588,861 (dollar_amount) — Partners' capital at December 31, 2024
• $5,229,935 (dollar_amount) — Net realized losses on futures and forward currency contracts for the nine months ended September 30, 2025

FAQ

Risk Factors

• Derivative Contract Losses [high — financial]: The firm experienced significant net realized losses of $(5,229,935) and net unrealized losses of $(257,988) on futures and forward currency contracts for the nine months ended September 30, 2025. This is a substantial reversal from the gains reported in the prior year and is a primary driver of the current net loss.
• Interest Rate Sensitivity [medium — market]: The firm's investment strategy heavily relies on U.S. Treasury notes, which comprised $103,197,220 of total investments at September 30, 2025. Fluctuations in interest rates can significantly impact the fair value of these holdings and the firm's overall financial performance.
• Decreased Net Interest Income [medium — financial]: Net interest income decreased to $3,592,962 for the nine months ended September 30, 2025, from $4,695,181 in the same period of 2024. This reduction in a key income stream further contributes to the overall decline in profitability.
• Declining Partners' Capital [medium — financial]: Partners' capital decreased from $114,588,861 at December 31, 2024, to $107,143,649 at September 30, 2025. This decline is directly linked to the net losses incurred during the period.

Industry Context

Nestor Partners operates within the investment management industry, which is highly competitive and sensitive to market volatility. The firm's strategy, heavily focused on U.S. Treasury notes and derivative contracts, exposes it to interest rate risk and the performance of global currency and commodity markets. Recent performance indicates challenges in navigating these markets effectively, leading to significant losses.

Regulatory Implications

As an investment company, Nestor Partners is subject to regulations governing financial services and investment management. While the filing notes no uncertain tax positions requiring reserves, the significant losses and volatile performance could attract increased scrutiny from regulators regarding risk management practices and disclosures.

What Investors Should Do

1. Review derivative strategy and risk management.
2. Assess impact of interest rate changes on Treasury holdings.
3. Monitor trend of declining net interest income.

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 — Reported a net loss of $3,768,123, a significant reversal from the prior year, driven by derivative losses.
• 2024-09-30: Nine months ended September 30, 2024 — Reported net income of $5,784,681, indicating a strong prior performance.
• 2025-12-31: As of December 31, 2024 — Total assets were $116,053,316 and Partners' Capital was $114,588,861.

Glossary

Futures and forward currency contracts

These are derivative contracts that obligate parties to buy or sell an asset at a predetermined future date and price. They are used for hedging or speculation. (Significant realized and unrealized losses on these contracts were the primary driver of the firm's net loss in the current period.)

U.S. Treasury notes

Debt securities issued by the U.S. Department of the Treasury, considered to be among the safest investments. (These form the largest portion of Nestor Partners' investment portfolio, making the firm sensitive to interest rate changes.)

Partners' Capital

Represents the total investment made by the partners in the firm. It is affected by capital contributions, withdrawals, and the net income or loss of the partnership. (A decrease in Partners' Capital reflects the net losses incurred by the firm during the nine-month period.)

Net realized and unrealized losses

Realized losses occur when an asset is sold for less than its purchase price. Unrealized losses are on assets that have decreased in value but have not yet been sold. (The substantial net realized losses on derivative contracts are the main reason for the firm's significant net loss.)

Year-Over-Year Comparison

Nestor Partners has experienced a dramatic downturn in performance compared to the same period last year. For the nine months ended September 30, 2025, the firm reported a net loss of $3.77 million, a stark contrast to the $5.78 million net income in 2024. This reversal is primarily attributed to significant realized losses on derivative contracts, which were gains in the prior year. Total assets and partners' capital have also decreased, reflecting the negative financial results. Net interest income has also seen a decline, further contributing to the bearish sentiment.

Filing Documents

• c471-20250930x10q.htm (10-Q) — 4192KB
• c471-20250930xex31_1.htm (EX-31.1) — 13KB
• c471-20250930xex31_2.htm (EX-31.2) — 13KB
• c471-20250930xex31_3.htm (EX-31.3) — 13KB
• c471-20250930xex31_4.htm (EX-31.4) — 14KB
• c471-20250930xex32_1.htm (EX-32.1) — 7KB
• c471-20250930xex32_2.htm (EX-32.2) — 6KB
• c471-20250930xex32_3.htm (EX-32.3) — 6KB
• c471-20250930xex32_4.htm (EX-32.4) — 6KB
• 0000888471-25-000010.txt ( ) — 13674KB
• c471-20250930.xsd (EX-101.SCH) — 36KB
• c471-20250930_cal.xml (EX-101.CAL) — 37KB
• c471-20250930_def.xml (EX-101.DEF) — 113KB
• c471-20250930_lab.xml (EX-101.LAB) — 207KB
• c471-20250930_pre.xml (EX-101.PRE) — 208KB
• c471-20250930x10q_htm.xml (XML) — 3957KB

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS Nestor Partners

Financial statements

Financial statements For the three and nine months ended September 30, 2025 and 2024 (unaudited) 1 Condensed Schedules of Investments (a) 2 6 8 9 Notes to the Financial Statements 10 (a) At September 30, 2025 (unaudited) and December 31, 2024 (b) For the three and nine months ended September 30, 2025 and 2024 (unaudited) (c) For the nine months ended September 30, 2025 and 2024 (unaudited) Nestor Partners September 30, 2025 (unaudited) December 31, 2024 ASSETS EQUITY IN TRADING ACCOUNTS: Investments in U.S. Treasury notes at fair value (amortized cost $ 24,114,110 and $ 21,132,300 ) $ 24,130,106 $ 21,155,457 Net unrealized appreciation on open futures and forward currency contracts 795,090 862,180 Due from brokers, net 1,405,240 3,224,562 Cash denominated in foreign currencies (cost $ 843,441 and $ 369,306 ) 832,852 344,936 Total equity in trading accounts 27,163,288 25,587,135 INVESTMENTS IN U.S. TREASURY NOTES at fair value (amortized cost $ 78,986,255 and $ 84,017,183 ) 79,067,114 84,096,306 CASH AND CASH EQUIVALENTS 2,554,305 5,702,804 ACCRUED INTEREST RECEIVABLE 464,234 667,071 TOTAL $ 109,248,941 $ 116,053,316 LIABILITIES AND PARTNERS' CAPITAL LIABILITIES: Capital contributions received in advance $ 2,700 $ 56,857 Net unrealized depreciation on open futures and forward currency contracts 205,600 14,702 Accrued management fees 71,709 78,666 Accrued installment selling commissions 51,487 60,511 Accrued trade execution and clearing costs 5,022 10,010 Due to brokers, net 756,929 - Cash overdraft denominated in foreign currencies (cost $ 221,821 and $ 0 ) 222,505 - Accrued expenses 114,346 71,197 Capital with

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of Nestor Partners' (the "Partnership") financial condition at September 30, 2025 (unaudited) and December 31, 2024 (audited) and the results of its operations for the three and nine months ended September 30, 2025 and 2024 (unaudited). These financial statements present the results of interim periods and do not include all disclosures normally provided in annual financial statements. It is suggested that these financial statements be read in conjunction with the audited financial statements and notes included in the Partnership's annual report on Form 10-K filed with the Securities and Exchange Commission as of and for the year ended December 31, 2024. The December 31, 2024 information has been derived from the audited financial statements as of and for the year ended December 31, 2024. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"), as detailed in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("Codification"), requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. Actual results could differ from these estimates. The Partnership enters into contracts that contain a variety of indemnification provisions. The Partnership's maximum exposure under these arrangements is unknown. The Partnership does not anticipate recognizing any loss related to these arrangements. Income Taxes (Topic 740) of the Codification clarifies the accounting for uncertainty in tax positions. This requires that the Partnership recognize in its financial statements the impact of any uncerta

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