Kosta Ouzas tells how Amaranth Advisors trader Brian Hunter made massive leveraged bets on natural gas that dominated energy markets, then lost $6 billion in September 2006 when prices reversed. The firm collapsed after managing $9 billion at its peak.
Around $9 billion.
September 2006.
Over $6 billion disappeared in that month.
Amaranth Advisors was the new star of the hedge Fund World in 2006, managing around $9 billion. Its crown jewel was Brian Hunter, a trader whose bets on natural gas were as big as they were directional. Hunter didn't nibble. He swung from the fences with leverage, and when it worked, the profits were staggering. By mid-2006, Amouranth was dominating the energy markets. Hunter's trades became self fulfilling forces so large that they moved the market in his favor. Investors couldn't wire money fast enough. But there was a fatal flaw. The entire strategy leaned heavily in one direction. In September, natural gas prices turned sharply against them. Losses didn't bleed in slowly. They absolutely detonated. Over 6 billion vanished in a single month. Amaranth was forced to liquidate. In the span of weeks, the rising star was gone, leaving only another cautionary tale in the long list of hares that sprinted too far too fast.
