hedge fund gets clobbered whos next

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    Amaranth Says Funds May Have Lost 35% on Natural Gas (Update2)

    By Katherine Burton

    Sept. 18 (Bloomberg) -- Amaranth Advisors LLC, a hedge-fund manager with $9.5 billion in assets, said last week's plunge in natural-gas prices left its two main funds with year-to-date losses that may exceed 35 percent.

    ``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, founder of the Greenwich, Connecticut-based firm, said in a letter to investors obtained by Bloomberg.

    The decline came after the Amaranth funds had gained almost 30 percent through August. Gas prices fell 12.2 percent last week as the U.S. Energy Department reported its first triple-digit inventory increase in more than a year. Demand for the power- plant fuel usually declines after summer air conditioner use slows and before heating needs pick up.

    Amaranth was ``near the end of our disposition of natural- gas exposure,'' the letter said, adding that Amaranth had met every margin call. Steve Bruce, a spokesman for Amaranth, declined to comment.

    The firm has an energy trading desk of more than 20 people. Brian Hunter, who works in Calgary, Canada, is Amaranth's head energy trader.

    Maounis spun his firm off from Greenwich-based Paloma Partners in 2000. A convertible-bond specialist who worked at Paloma for 10 years, Maounis started Amaranth with 27 investment professionals and about $450 million in assets. The firm's initial strategies included trading convertible bonds and the stocks of merging companies.

    To contact the reporter on this story: Katherine Burton in New York at [email protected] .

    Last Updated: September 18, 2006 10:31 EDT
 
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