Tuesday, September 19, 2006

was sind schon 5billionen $ verlust unter freunden / hedge funds blow up

“AMARANTH ADVISORS, the $9.5 billion (£5.06 billion) hedge fund manager, has told investors including clients of Morgan Stanley and Credit Suisse that it may have lost billions of dollars after it was wrong-footed by a drop in American natural gas prices….

Rivals expressed concern last night that the natural gas markets could be affected if Amaranth has difficulty liquidating its trades. Its problems could be exacerbated if investors demand their money immediately.

In an attempt to raise cash to meet margin calls and investor demands for their money, Amaranth is selling most of its ¤ debt, traders said.

Amaranth may not find it easy to exit its positions quickly because the natural gas futures market is highly volatile and dominated by a handful of large players, including Morgan Stanley, Touradji Capital and Goldman Sachs. Amaranth has said that it has met all its margin calls.

Prime brokers, the investment banks that lend hedge funds money to trade, have tended to demand that their clients increase collateral on their trades when they fall into financial difficulties. ”

auch dazu

Wall Street assesses hedge fund exposure
Goldman, Morgan Stanley will post losses; greater risk seen


Investors were assessing Wall Street banks' exposure to the high flying hedge fund industry Tuesday, a day after a Connecticut-based hedge fund said it lost billions of dollars.

Amaranth Advisors on Monday said it suffered huge losses of more than $5 billion, or more than half of the fund's $9.25 billion in assets. Though fallout from Amaranth did not appear to be causing panic in other markets, reports from institutional investors of direct losses from Amaranth began trickling in Monday.
Goldman Sachs Group Inc. said one of its funds, Goldman Sachs Dynamic Opportunities Ltd. , a hedge fund vehicle listed on the London Stock Exchange in July, may post a 2.5% to 3% loss in September because of its holding in Amaranth, depending on the performance of its other holdings http://immobilienblasen.blogspot.com/2006/09/goldman-sachs-bank-oder-hedgefonds.html
(klar das die aktie von gs nicht auf diese tolle news reagiert.....)
Brad Hintz, an analyst with Sanford C. Bernstein & Co., said disclosure of the Amaranth losses has served two purposes. First, bank credit departments are likely reviewing exposure to hedge funds. Secondly, the sudden move of natural gas prices doesn't seem to have had a big impact on the proprietary trading made by big banks over the last few months as some had feared
Amaranth's losses were limited to the investors in that fund. The fund said it has been able to meet all of its margin calls. Margin is a loan extended to an investor usually by a trading firm.

"We're not talking about a collapse here," Hintz said. "We're talking about pulling out of a given business."
But Hintz, former corporate treasurer at Lehman Bros. , also believes credit departments at big firms today are reassessing the so-called counterparty risk, or leverage, that comes with extending margin credit to hedge funds. The collapse of Long-Term Capital Management in 1998 required a $3.6 billion bailout by banks organized by the Federal Reserve Bank of New York.
plus von bloomberg
Amaranth, Eight Years After LTCM, Shows Lapse in Risk Control

Sept. 19 (Bloomberg) -- Eight years after the collapse of Long-Term Capital Management LP, the hedge fund industry is still struggling to manage trading risks.

Amaranth Advisors LLC of Greenwich, Connecticut, yesterday told investors it lost about $4.6 billion following wrong-way bets on natural gas prices. MotherRock LP, a $400 million fund, collapsed because of energy trades. Ospraie Management LLC started liquidating a $250 million fund in June after losses in the commodities markets.

As more than $20 billion poured into funds that invest in energy and commodities this year, commodities prices fell. The Reuters-Jefferies CRB Price Index, a market benchmark for everything from oil and natural gas to copper and sugar, dropped 16 percent from its May record, the biggest decline in at least two decades.

``I expect to see more losses, but probably not at the same magnitude as Amaranth,'' said Peter Fusaro, co-founder of New York-based Energy Hedge Fund Center, which advises companies on energy trading strategies. ``There are too many managers out there getting too much money because of the recent interest in commodities, and their risk-control systems aren't adequate enough to cope with the inflows.''

Amaranth's trading losses are among the biggest since 1998, when Greenwich-based Long-Term Capital lost $4 billion investing in government bonds. Long-Term Capital, founded by former Salomon Brothers Inc. Vice Chairman John Meriwether, received $3.5 billion from lenders after the Federal Reserve organized a bailout. (natürlich fed to the rescue...)

Hunter's Bets

The trader responsible for Amaranth's natural-gas bets is Brian Hunter, co-head of the firm's global energy and commodities unit. As of June 30, energy trades accounted for about half the capital of the Amaranth funds.

Hunter, 32, who works in Calgary, about 2,500 miles from Amaranth's headquarters in Greenwich, couldn't be reached yesterday after Amaranth founder Nick Maounis sent a letter to investors notifying them of the losses.

Amaranth is ``working to protect our investors while meeting the obligations of our creditors,'' Maounis, 43, said in the letter. The firm's two main funds, which had gained 26 percent through August, were down at least 35 percent this year as of yesterday. (das nenne ich mal ne performance!)

Amaranth's losses piled up as gas prices dropped 12 percent last week after the U.S. Energy Department reported stockpiles climbed above last year's levels.

`Directional Traders'

Natural gas futures are the worst-performing commodity this year, slumping 51 percent. Soybean meal futures in Chicago have fallen 16 percent and cocoa prices in London are down 15 percent.

``The problem is everyone was bullish, so directional traders lost money,'' said Marcel Melis, founder of Energy Capital Management BV, an Amsterdam-based hedge fund that plans to start trading Oct. 1.

The average hedge fund gained 9.2 percent last year after fees, slightly ahead of 2004's 9 percent and well below the average annual return of 16 percent compiled during the 1990s, Hedge Fund Research Inc. reported. The average fund was up 5.8 percent this year as of July 31.

Fund Closings

More than 500 hedge funds shut in the past two years, mainly because of bad investment performance, according to data compiled by Chicago-based Hedge Fund Research. The funds are private pools of capital that allow managers to participate substantially in the gains on investments made on behalf of clients.

A U.S. Securities and Exchange Commission rule that tightened oversight of the $1.2 trillion industry was struck down by a federal appeals court in June, leaving the agency without the power to conduct random inspections of many funds.

Hedge fund managers at Aeneas Capital Management LP are under investigation by regulators in the U.S. and Malaysia after holdings in Malaysian stocks led to losses of about 60 percent in one of its funds, three people with knowledge of the matter said last week.

hier ne story die genau ins schwarze trifft
This is why I find it even more disturbing when I read about the "infrastructure" players of markets further reducing margin requirements. These requirements used to be put in place for fundamental solvency reasons--not because they were dictated by fiat, but because they limit market participants' ability to take on so much leverage they hurt not only themselves but others through default. Examples that worry me greatly are the NYSE paring back specialist reserve requirements by 40%, brokerage banks nearly eliminating margin requirements on the trading they do for hedge funds, Joint-Back Office agreements giving hedge funds access to "house capital" of banks, and the Federal Reserve itself allowing banks to skimp on reserves (severely).
scheint so als wenn endlich die ersten risse in der heilen welt des "leverage" zu sehen sind. bin gespannt ob das auswirkungen hat. wenn nicht wird der nächste knall nur noch größer.
vergleicht man die summen mit dem ltcm debakel wird schnell klar was für ein großes rad inzwischen gedreht wird. denke das der markt nicht zu kontrollieren ist.
regulierungen die bisher imer abgelehnt worden sidn kommen sicher erst wenn alles zu spät ist.
wie üblich......
übrigens auch ein grund warum ich long gold bin
jan-martin

2 Comments:

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