Amaranth’s Future Remains Uncertain After $6 Billion Loss

Sep 30 2006 | 8:59am ET

Amaranth Advisors’ survival is anything but certain, in spite of claims last week by founder Nicholas Maounis that the fund had “every intention” of staying in business.

The Greenwich, Conn.-based hedge fund firm lost $6 billion (out of $9.5 billion in assets) on natural gas bets this month, may be less sanguine about its hopes this week, as redemption demands pour in and the Securities and Exchange Commission launches an investigation into the mess.

Two investors who met with Maounis told Bloomberg News that he said Amaranth needs to find a buyer, for all or part of the firm, to stay above water. Citigroup is reportedly interested, and its hedge fund chief, Dean Barr, spent a lot of time in Greenwich last week in discussion, but there is no indication when or if a deal will be struck.

Possibly worse still, SEC Commissioner Paul Atkins said the regulator is investigating “whether there was any misrepresentation to investors.” Amaranth has retained law firm Skadden Arps Slate Meagher & Flom to help it put
into place a system for redemptions and prepare for any possible lawsuits.

Meanwhile, the New York Mercantile Exchange said it warned Amaranth in August that its natural gas trades were too big, and that the firm cut some of the trades in response. And the man behind those disastrous trades, Brian Hunter, has left Amaranth. The firm wouldn’t say whether he had resigned or been terminated, but it did say he didn’t receive any termination pay.


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

Concerned About Your HFT Exposure? Hedge It!

Mar 26 2015 | 1:06pm ET

High-frequency trading has been a persistent storyline for several years. The trading...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note