yes. to the other side of THAT trade. business already done. anyone who was short any of the months in NG they were heavy as well as anyone who was betting on a closing of the spread made a ton of money.
Theres plenty of blame to go around. But if this guy stayed within limits and everything documented, what did he have to lose? He has his bundle from last year, so he can retire and never work again. If the trade had gone his way, the fund size doubles in a month, hes a hero with potentially a 250 million+ bonus. If Natty had gone to 15 or 20, the folks who end up ultimately paying his bonus are folks who use NG to heat their homes or run a business. His trade failed, he has nothing to lose and he reitres. The incentive to this firm/trader was wrong. This is kind of why some larger firms will grant options/stock that vests through time, so traders dont bet the ranch and walk away if it fails. This type of trading will ultimately create much greater problems as a regulator or legislator can say, with some real gravity, that these markets require real supervision and investigation. It'll also be interesting to see if any of the sellers were NG producers who intend to deliver against their sale. The earnings will be curious
only the losers aren't so loveable: banks and hedge funds for the wealthy. (although I hear san diego retirement fund had $145m invested in this. thats CRAZY that public money is put in these wild hedge funds. ever hear of muni bonds and S&P? i couldn't imagine whoever approved the vesting of this type of money into aggressive energy trading) furthermore, this could contribute to driving nat gas prices down for many.
It's tough to feel too sorry for anyone in this circumstance. Read "When Genius Failed" and "Inventing Money" for more interesting insights into the world these 'traders' live in. These two reads provide interesting looks into the LTCM wreck from several years ago. Good trading
This article from the Wall Street Journal , gives interesting insight into Hunters background and positions. http://www.moneyweb.co.za/shares/international_news/184580.htm
Hedge Funds tied to Amaranth are starting to report massive losses; The Man Group (largest money manager in the world) just announced their YTD returns will be shaved by 25% because of a large stake in Amaranth they held. Ouch.
Man is large but dwarfed by firms like Fidelity When you are the market, as this guy apparently was, you have to manage the position. How do you leave stops? He crushed the mkt as he got out in a somewhat orderly fashion, imagine if someone offered hugh loads on NG and didnt care about the fill?
sorry if this has already been said, I didn't have time to read all the thread... but it was my understanding that Amaranth actually bought most of this position in from another failed energy fund, MotherRock. They have now in turn sold the position on to Citadel and Jp Morgan...this is turning into one hot potato!!