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pisia
Posts: 52
Joined: July 14th, 2002, 3:00 am

Amaranth

December 15th, 2006, 6:11 am

QuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: UnderTheRadarThe old reason of, "a highly unlikely event took place" is the blame. In other words, the spread did something I never expected it to do and I blew up because I was trading too many contracts. ........however, when the market smells the blood, it goes in for the kill.I'm keenly interested in the connection between these two statements. Did the spreads on Amaranth's trades diverge for reasons wholly based on the fundamentals of the underlying? Or did the spreads diverge or fail to converge because other market participants knew that someone had put on too large a spread trade? If it was the first, then Amaranth was the unlucky victim of a 1-in-a-million fluke event. If it was the second, then Amaranth was doomed to fail with near 100% probability.Keynes said that the markets can remain irrational longer than you can remain solvent. But I'd argue that other market participants might trade in a way that systematically holds the market in an "irrational" state because they know they can profit from others that have made bad bets. What seems irrational to one "unlucky" player is actually optimal trading strategy for another.It was actually both. It was Amaranth that was manipulating the market by artificially propping up prices in the face of fundamentals, which were clearly going the other way. (Almost) everybody saw that, and they were just waiting for the inevitable, there was no escape for the guy short of a couple of category 5 hurricanes hitting the gulf coast area in short order. He was the long market. There was no way for him to get out of the positions. Wait! There was a way! It just cost $7bn.
 
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TraderJoe
Posts: 11048
Joined: February 1st, 2005, 11:21 pm

Amaranth

February 1st, 2007, 9:07 pm

QuoteGoodbye Amaranth, Hello Continuum?It sure looks like that Nick Maounis is not one to take things lying down! So who’s he, and why is he newsworthy? Because he’s the founder of that hedge fund that made the most headlines in 2006, Amaranth Advisors LLC. According to his attorney David Boies, Maounis and a few former colleagues are toying with the idea of floating a new company that will either offer wealth management services for investors or consultation services for other funds.But first things first – the closure of Amaranth is the issue at hand now. The hedge fund is in the process of settling its affairs and finding suitable work opportunities for its erstwhile employees. In case you’re interested though, watch out for the appearance of funds named Continuum or Segue – they’re the ones that will involve Maounis and his team
 
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TraderJoe
Posts: 11048
Joined: February 1st, 2005, 11:21 pm

Amaranth

August 13th, 2007, 1:07 am

QuoteEx-Amaranth Trader Says New Firm Is ‘On the Brink’Brian Hunter, whose ill-fated energy trades helped to bring down Amaranth Advisors, has offered a dire warning about his latest hedge-fund venture. Citing scrutiny from regulators, he said in court filings that the firm, called Solengo Capital Advisors, could flame out before it even gets up and running.In an affidavit submitted Friday, Mr. Hunter made an impassioned plea for the courts to block the Federal Energy Regulatory Commission from taking enforcement action against him, claiming that it has put his new hedge fund “on the brink of complete disintegration.” Mr. Hunter was the head energy trader at Amaranth, a fund that lost $6 billion in a matter of days last year and was soon forced to shut down. Not long after that, it emerged that Mr. Hunter, apparently unshaken by the recent debacle, was already planning a new hedge fund of his own.But Amaranth has come back to haunt Mr. Hunter. Last month, the F.E.R.C. said it was seeking $291 million in penalties from Amaranth, Mr. Hunter, and another Amaranth trader, Matthew Donohoe, for what it said was manipulation of natural gas markets. All have denied wrongdoing, and Mr. Hunter, who faces a $30 million fine, has asked the court to halt the enforcement action to prevent further damage to Solengo.In his latest court filing, Mr. Hunter emphasizes the time and effort he has devoted to assembling a new team at Solengo, which he says has suffered defections among traders and potential investors. As recently as last week, two people who had agreed to be portfolio managers at Solengo pulled out, the affidavit said.That time and effort, he wrote, is “an asset” that, “though intangible, is as valuable as any precious physical good.” “Yes, yes, THIS is the thing that will ruin Huntego’s reputation,” Bess Levin writes in a sarcasm-drenched post on Dealbreaker (which, as the post alludes to, is the subject of a lawsuit from Mr. Hunter, who claims the blog improperly posted Solengo marketing materials.)Not a popular guy.NY Times.com
 
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bogracer
Posts: 94
Joined: February 7th, 2005, 5:35 pm

Amaranth

August 13th, 2007, 6:15 am

Is the guy holding the fish really Hunter? I mean, that's the mental picture I have in my head now, but I wonder if there's some fishing enthusiast out there who has NO IDEA that he's got $7b of dealbreaker.com notoriety.
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