hedge fund amaranths problems more on this

SAN FRANCISCO (MarketWatch) - Some investors are so eager to get out of their investment in Amaranth Advisors LLC that they're willing to sell their stakes in the massive hedge fund for less than half what they were worth at the end of August.
Others are angry about the timing of Amaranth's disclosure of its huge trading losses, according to two hedge fund investors who requested anonymity.
Amaranth could suffer year-to-date losses of 35% after natural gas trades went awry, founder Nicholas Maounis said in a letter to investors that was obtained by MarketWatch on Monday. See full story.
Amaranth investors are now offering to sell their stakes in the fund for between 35% and 45% of the estimated net asset value at the end of August, according to Hedgebay, which operates a secondary market for hedge fund holdings.
Potential buyers are interested in paying between 10% and 20% of the estimated net asset value, Hedgebay data show.
Hedgebay co-Founder Jared Herman said that no trades have taken place yet, but there are a lot of investors willing to sell and several parties ready to buy.
The big discounts are likely driven by concern that Amaranth's remaining assets are very illiquid and will take a long time to unwind, he explained.
Amaranth has some private-equity holdings, which are difficult to value and sell quickly, he noted, adding that the hedge fund is likely to sell its positions in an orderly way over time. A spokesman for Amaranth said early Tuesday that the hedge fund would have no comment beyond the investor letter it disclosed on Monday.
Hedgebay serves funds of hedge funds, banks, ultra-wealthy individuals and family offices that either want to boost their investments in a fund that won't accept new money or are trying to get out of a fund that has a long lock-up, preventing quick redemptions. See related story.
Most transactions take place at a premium to the net asset value of funds, because access to top hedge-fund talent is usually limited. But Amaranth's shock announcement has sparked a run for the exits among its investors.
Anger
Two hedge fund investors who didn't want to be identified said there's anger at the timing of Amaranth's announcement, which may have restricted some investors from putting in redemption requests for the third quarter.
On some classes of fund shares, Amaranth restricts investors to redeeming 30 days after the end of each quarter, the investors said.
In order to receive a quarterly redemption, investors have to request that in writing 45 days before redemptions are due.
For the third quarter, redemptions were due at the end of October. But to redeem then, investors would have had to request it 45 days earlier. That means redemption requests should have been in by the end of last week.
Information about Amaranth's losses first emerged publicly on Monday. An Amaranth spokesman declined to comment when asked late Tuesday about the firm's redemption policy and the timing of its disclosure.
Still, the investors also noted that Amaranth can suspend all redemptions in several other situations, including when investors representing more than 7.5% of the fund's assets ask to get out.
Most investors have already put in such requests, so Amaranth is likely to freeze all redemptions, they added.
Alistair Barr is a reporter for MarketWatch in San Francisco.