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PaperCut
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Joined: May 14th, 2004, 6:45 pm

Amaranth

September 20th, 2006, 1:50 am

Holy Crap, Amaranth !The BBC article doesn't seem to give it justice.The WSJ today said "5 Billion in Losses in One Week."Ah, well. At least the guy is going out like the Crocodile Hunter.
 
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Paul
Posts: 10789
Joined: July 20th, 2001, 3:28 pm

Amaranth

September 20th, 2006, 5:15 am

"Multi-strategy" hedge fund?! I don't think so. No, I think they bet it all on heads and it came up tails.P
 
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farmer
Posts: 13477
Joined: December 16th, 2002, 7:09 am

Amaranth

September 20th, 2006, 12:40 pm

QuoteOriginally posted by: Paulthey bet it all on heads and it came up tails.The best explanation is that they reached a point where they felt they had nothing to lose. It seems like a strange definition of nothing. But in a world of wusses where people pay > 50% taxes and take it without flinching, who would be afraid of getting punched back? The consequences are nothing, nobody will even key-scracth their cars in the parking lot, and they will be all be in business in new funds in 18 months.People are even more timid in their reactions to investments that do go wrong, than they were in choosing investments in the first place. People who use the word "fag" or ogle their ugly secretaries will come in for more civil suits and public pariah status than these guys for doubling up. They would be in for more trouble if they told an investor his wife was "fat."
 
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ppauper
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Amaranth

September 20th, 2006, 12:51 pm

that's quite a hitI liked the link to Hedgestock from that article....any one here attend ?
 
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Paul
Posts: 10789
Joined: July 20th, 2001, 3:28 pm

Amaranth

September 20th, 2006, 1:50 pm

pp, Hedgestock, I was there, wasn't everyone? See photos. It was quite obscene for a variety of reasons.Amaranth, from CNBC: Amaranth Advisors has violated a cardinal rule of investing: Never make a trade that could put you out of business.The Greenwich, Conn.-based hedge fund was scrambling today to sell holdings after a wrong-way wager on natural gas cost it roughly half of its $9.5 billion portfolio.Amaranth's brokers -- including Goldman Sachs and other big financial firms -– stepped in to help the hedge fund raise cash by liquidating some of its assets. Amaranth made about $1 billion last year, when energy prices were going up. But its energy desk failed to predict the extent of the recent downturn in natural gas prices, the fund told investors in a letter that went out on Monday. The trade that led to the huge loss was attributed to 32-year-old Brian Hunter, an experienced energy trader who headed Amaranth's energy desk for the past five months. His trades brought in $800 million for the firm last year, and Hunter pocketed at least $75 million in compensation, according to Trader Monthly magazine.Hunter's downturn was as sudden as it was shocking. He was up about $2 billion as recently as the end of August, The Wall Street Journal reports. Then Hunter's trades lost $5 billion in about a week.Hunter thrived on volatility, reaping profits on price declines and surges alike, the Journal reports. But late last week, Hunter watched with growing alarm as gas prices took a steep dive, particularly in futures contracts for delivery of gas for this coming winter. "(Hunter) thought he knew what the market was doing," says Journal editor Phil Kuntz, who worked on the newspaper's coverage of the Amaranth debacle. "The commodities market is very, very volatile. You make a lot of money very, very quickly but you can lose a lot of money very quickly," Kuntz adds. "(Hunter) made about $1 billion in April. He lost a bunch of money in May, then he made a bunch of money back. He had a great August -– by the end of August (the Amaranth trading desk) was up upwards of 20% (year to date) but then they took a big hit in the course of a week in September."Fund investors feeling the sting of Amaranth's recent losses include Morgan Stanley, Credit Suisse, pension funds and individual investors.
 
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nazzdack
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Amaranth

September 21st, 2006, 12:26 am

The primary energy trader at the fund was "The King of Pain" one too many times. He had a history of volatile results.
 
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farmer
Posts: 13477
Joined: December 16th, 2002, 7:09 am

Amaranth

September 21st, 2006, 12:56 am

I don't think there is any lesson to be learned, or any book to be written on this one.
 
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zap
Posts: 1
Joined: December 7th, 2001, 7:07 am

Amaranth

September 21st, 2006, 2:16 am

It was not anything to do with risk systems, models or lack of knowledge of the risk. They definitely knew what they were doing, I don't think it was just Brian that wanted to gamble either. There is more twistedness to this story than appears.
 
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TraderJoe
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Joined: February 1st, 2005, 11:21 pm

Amaranth

September 21st, 2006, 6:53 am

QuoteOriginally posted by: farmerI don't think there is any lesson to be learned, or any book to be written on this one.Eggs and basket come to mind ...
 
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ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

Amaranth

September 21st, 2006, 12:29 pm

QuoteOriginally posted by: Paulpp, Hedgestock, I was there, wasn't everyone? See photos. It was quite obscene for a variety of reasons.so does the convertible belong to paul ?
 
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zeta
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Location: Houston, TX
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Amaranth

September 21st, 2006, 12:34 pm

where are all the e types and 356 coupes?
 
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ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

Amaranth

September 21st, 2006, 12:36 pm

QuoteOriginally posted by: zetawhere are all the e types and 356 coupes?paul can only drive one car at a time !
 
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Paul
Posts: 10789
Joined: July 20th, 2001, 3:28 pm

Amaranth

September 21st, 2006, 1:27 pm

I confess, I do have a couple of convertibles. But they are far less ostentatious than that!P
 
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migalley
Posts: 3696
Joined: June 13th, 2005, 10:54 am

Amaranth

September 21st, 2006, 1:35 pm

QuoteOriginally posted by: PaulI confess, I do have a couple of convertibles. But they are far less ostentatious than that!PFiat Punto?
 
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Paul
Posts: 10789
Joined: July 20th, 2001, 3:28 pm

Amaranth

September 21st, 2006, 1:46 pm

You'll never guess! (Having said that, I'm sure one of my many stalkers will be able to advise!)P
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