hedge fund takes gas

There is no comparison to Mother rock and Amaranth. MOther rock was pure energy Amaranth was not not pure energy. The size of the positions they put on may sound small is the equity/yield curve markets but 75,000 strips is massive in nat. gas. This will take a long time to unwind.

Look at where the participants worked prior Dynegy, Williams and Enron. The standard equity var. model CAN not be applied to illiquid markets that move in a non linear manner.
 
Amaranth's head of energy trading desk did quite well last year, over the hurricane season.

http://www.canada.com/nationalpost/...d=7dbce877-a0c5-4f0c-bd9c-6526eb7a60c0&k=9750

Amaranth have had some problems recently, since they grew very fast. When I last heard of some solid figures, they were still only around $2-3B, going to 7-9 in 18 months is explosive growth. So they were trying to maintain the return while managing 3x AUM, a difficult task. I have not heard of anything in '06, but in '05 I heard they were having a hard time generating good strategies.

Nevertheless, their internal risk mgmt should be shot, either the risk manager was not forceful, or the investment committee just let things slide. Both were pretty bad warning signs.
 
That will teach Maouis to give out equity.

Long term equity participation by the desk heads might naturally result in better risk management.
 
Running the leg down the length of economic rings, draining away excess in beautiful circular breaths. That trader is now yelling that primal scream that few can recognize as audible.
A deteriorated gambler and hopefully less degenerate as a result. I hope the trader makes a comeback. That would be news....
 
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