Houston Chronicle – Huge trading losses at Amaranth Advisors belie the notion that “multistrategy” hedge funds are safer than their single-strategy peers and could lead to calls for more transparencyand controls, experts said Tuesday.
The $9 billion Amaranth fund told investors its year-to-date losses may top 35 percent as a result of wrong-way bets the price of natural gas would rise. The losses will almost certainly overshadow gains in any of its other strategies and seriously threaten the future of the fund.
While Amaranth said it was working to limit investor losses and pay creditors, some experts expect investors to abandon the firm and leave it a shadow of its former self, if it survives at all.
“Fifty percent is a yardstick that some people use to say that once you have dropped that much, the game is over,” said Roger Ehrenberg, chief operating officer of Monitor110, a data provider for institutional investors.
