Amaranth Hedge Fund Liquidation
Amaranth Advisors LLC, the hedge fund manager which lost billions of dollars in energy trades, will suspend redemptions and liquidate its remaining positions.
In August Amaranth's value was estimated at $9B, this declined by 60% during September, its funds are down 60% YTD.
Amaranth suffered a $6B loss this month in wrong way bets on natural gas derivatives, including $560M in one day alone.
Scott Berman, an attorney with Kaplan, Friedman, Seiler & Adelman, said his clients are considering taking legal action against Amaranth for possible misrepresentation of performance or strategies, or for other violations of securities laws.
"There has to be some unpeeling of the onion," Berman said. "Sometimes there is nothing that meets the eye, sometimes it is rotten to the core."
Amaranth generated more than $3B in profit from January 2005 to August 2006, largely on commodity trades.
Those gains should have been a "warning sign" to investors, said Magnus Olssen, portfolio manager at London & Capital Group, a fund-of-funds based in the United Kingdom.
"You know it is extremely difficult to produce solid numbers without taking stupid risks," Olssen said. "It shows you how dangerous it is to be too return-hungry."
The above comment makes you wonder about the "solid results" bandied about during quarterly reporting to "wow" return hungry investors.
Amaranth will be neither the first nor the last hedge fund to fold its tent. In the next few years, we will become accustomed to that whooshing sound...
That is the sound of investors money being sucked into the black hole currently known as the derivatives market.
In August Amaranth's value was estimated at $9B, this declined by 60% during September, its funds are down 60% YTD.
Amaranth suffered a $6B loss this month in wrong way bets on natural gas derivatives, including $560M in one day alone.
Scott Berman, an attorney with Kaplan, Friedman, Seiler & Adelman, said his clients are considering taking legal action against Amaranth for possible misrepresentation of performance or strategies, or for other violations of securities laws.
"There has to be some unpeeling of the onion," Berman said. "Sometimes there is nothing that meets the eye, sometimes it is rotten to the core."
Amaranth generated more than $3B in profit from January 2005 to August 2006, largely on commodity trades.
Those gains should have been a "warning sign" to investors, said Magnus Olssen, portfolio manager at London & Capital Group, a fund-of-funds based in the United Kingdom.
"You know it is extremely difficult to produce solid numbers without taking stupid risks," Olssen said. "It shows you how dangerous it is to be too return-hungry."
The above comment makes you wonder about the "solid results" bandied about during quarterly reporting to "wow" return hungry investors.
Amaranth will be neither the first nor the last hedge fund to fold its tent. In the next few years, we will become accustomed to that whooshing sound...
That is the sound of investors money being sucked into the black hole currently known as the derivatives market.
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