Dwight Anderson is accustomed to staring into the breach. Not long ago, the flagship hedge fund at Ospraie Management, the company he started in 1999, was down 19%. Anderson managed to pull the hedge fund back from the brink—but it wasn’t easy.

“I live constantly with stress,” Anderson explained to Bloomberg in 2007. After all, Ospraie ran $7 billion, a huge sum for a commodity-based operation. Then again, for a Tiger Cub and type A personality like Anderson, that kind of pressure is a chance to rise to a challenge. That time, Anderson didn’t disappoint.

But on Tuesday, possible proof that Anderson flew too close to the sun: Anderson announced the close of the flagship Ospraie hedge fund after its 27% loss in August on energy and mining.

“I am very sorry for this outcome,” Anderson, 41, wrote in a client letter.

The $2.8 billion hedge fund will distribute 40% of its client money by the end of the month, with an additional 40% due at year-end. The closure might mean more pain for Lehman Bros., the flailing Wall Street firm and a 20% owner in Ospraie. The shuttering of the hedge fund is also a sign of the routing taking place in the commodity space.

In August, the HFN CTA/Managed Futures Average gained 0.76%, according to the data available at this point in time. July might present a more accurate picture of the environment; the average lost 3.36%.

“The volatility in the commodity market [in July] was significant,” said Peter Laurelli, vice president of Channel Capital Group. “There was a sharp reversal.”

In addition to Ospraie, the commodity market this summer also burned BlueGold Capital, a hedge fund firm run by another big-name manager, Pierre Andurand. BlueGold lost 19% in July.

For its part, the Ospraie flagship hedge fund has returned 15% annually since its inception in February 2000 through December 2007. As a whole, New York-headquartered Ospraie is still in charge of some $4 billion. In June, its special opportunity vehicle bought the ConAgra commodity-trading business.

Still, the failure of the flagship hedge fund is a taint on Ospraie, not to mention a blow to Anderson’s reputation; a reputation born from top-flight pedigree and steely bravery.

A Princeton University graduate, whose family named him after their favorite U.S. president, Dwight Eisenhower, Anderson joined Tiger Management, run by hedge fund legend Julian Robertson, in 1993. By 27, he was in charge of the Tiger commodity business. Anderson would later say Robertson taught him how to invest.

In 1999, Anderson joined Tudor Investment Corp., where he set up a commodity hedge fund. In 2004, Anderson spun out from Tudor. With $1.2 billion, he christened his spinoff Ospraie, an off-beat spelling of osprey, an oceangoing bird.

Meanwhile, the 6’3” Anderson gained a reputation as an adventurer who liked bungee jumping and heliskiing. Now 41, Anderson is said to have cut back on his thrill-seeking since getting married and becoming a father.

After the flagship Ospraie hedge fund lost 19%, Anderson recovered, investing heavy in agriculture. He told Bloomberg a 2007 trip to Brazil inspired his belief in farming. That turnaround earned Anderson fanfare as a gutsy investor.

A spokesman for Ospraie declined to comment on the fund closure.