Greenwich, Conn. – Amaranth Advisors LLC, a hedge-fund manager with about $9.5 billion in assets, told investors its two main funds fell an estimated 50 percent this month because of a plunge in natural-gas prices.
“We are in discussions with our prime brokers and other counterparties and are working to protect our investors while meeting the obligations of our creditors,” Nick Maounis, the 43-year-old founder of the firm, said in a letter obtained by Bloomberg News.
The funds, which had gained 26 percent through August, are down at least 35 percent for the year, about $4.6 billion.
Amaranth, which made so- called spread trades that try to profit from price discrepancies among futures contracts, is at least the second hedge fund to be hurt by this year’s tumble in natural gas.
Last month, MotherRock LP, a $400 million fund run by former New York Mercantile Exchange president Robert “Bo” Collins, went bust after natural-gas futures fell 68 percent from their Dec. 13 peak.
“The speed with which leveraged funds can evaporate is mind-boggling,” said Mark Williams, a professor of finance and economics at Boston University.
