Wall $treet Folly

Amaranth's former chief is planning on opening a new fund later this year

Nick Maounis, skipper (and risk manager extraordinaire) of the imploded $6+  billionish hedge fund Amaranth, is trying to make a comeback later this year with a so far modestly sized $200 million multi-strategy fund venture called Verition Fund Management LLC.  Verition is based on a derivative of the Latin 'veritas' or 'truth'.  (Maybe it's a combination of truth and fiction, thus Verition....). For those who haven't seen the yearbook picture of Nick at the left, it's circa 1976-77 --- one of his former classmates sent it to us some time ago.

``Many of you have inquired as to my future plans,'' Maounis wrote. ``I welcome the opportunity to speak with you personally about my new venture.''

Maounis plans to open Greenwich, Connecticut-based Verition Fund Management LLC later this year with more than $200 million, according to two former investors briefed on the venture. Clients with money in Amaranth when it shut down won't pay incentive fees for three years, said the investors, who asked not to be identified because the fund is private. While the fund won't charge a management fee, all investors will pay the fund's expenses.

Former Amaranth trader Brian Hunter is back from the dead

Brian Hunter has risen from the dead according to Bloomberg.  The former Amaranth energy trader who helped push that firm into oblivion in 2006 when his nearly market-cornering natural gas bets went bad (to the tune of over $6 billion), now advises Peak Ridge Commodity Volatility Fund, which focuses on mainly trading energy contracts, and is run by Boston private equity firm Peak Ridge Capital.  Apparently the firm is doing quite well -- at least so far -- having gained 6 percent in March, 49% for the March quarter, and 103 percent since starting up in November according to unnamed fund investors.

You may recall that Hunter tried to start up another energy trading venture, Solengo Capital, after the Amaranth debacle, but it never got off the ground on account of legal issues, even though he was said to have had no shortage of investors.  The Peak Ridge fund directly hired 10 Solengo employees, but not Hunter, who's now an advisor. Investors say that Hunter has no trading authority (although we'll take a wild guess that his advice drives the trading).  And thankfully, he has no part in the firm's risk management.

``For some investors, Hunter's name is a red flag and they will avoid the fund,'' said Patrick Tuohy, global head of sales and marketing at HSBC Holdings Plc's alternative investment group, which invests about $55 billion in hedge funds. ``However, some may dig deeper because in the past he did deliver some spectacular returns.'' HSBC's hedge fund group is not an investor in Peak Ridge's fund.

Former Amaranth traders hired by Moore Capital get the boot after big losses

The team of Canadian traders picked up last year by Moore Capital after the spectacular collapse of hedge fund Amaranth have been given the boot for poor performance.  They were based in Toronto.

Moore announced that it is closing down the office in a statement obtained by HedgeWorld. Approximately 15 people were laid off on Dec. 12, said a person familiar with Moore's operations. In plain language, the traders did not make money on the books they managed.

Louis Bacon runs Moore Capital, a New York-based hedge fund with more than $13 billion in assets. Following Amaranth's September 2006 meltdown, Moore created Moore Canada, a new unit based in Toronto. Manos Vourkoutiotis, a former top executive and trader at Amaranth, was named to head up the new unit. A team of several senior traders joined Mr. Vourkoutiotis, nine of whom were from Amaranth Advisors Canada

Amaranth traders hired by Moore Capital lost 15% in November

November proved to be a totally nasty month for many hedge funds.  And a Canadian hedge fund started last year by Moore Capital and the traders that they hired out of the carcass of Amaranth after it imploded was one of them that got stung: 

A group of former Amaranth Advisors LLC traders, recruited last year to start a Canadian hedge-fund unit for Moore Capital Management Inc., lost 15 percent in November, two people with knowledge of the firm said.

The Toronto-based unit, which managed $1 billion before the decline, opened a year ago to invest money for other Moore funds. It is overseen by Manos Vourkoutiotis, who was hired by the New York-based firm after Amaranth collapsed in September 2006. Last month's performance was hurt by stock and convertible-bond bets.

With Solengo sounding dead, Brian Hunter has a new consulting gig

Brian Hunter has a new gig.  And it's not with Solengo, the apparently dead on arrival energy trading firm he was trying to get off the ground.  According to online energy news site Sparkspread as reported on Financial News Online, the former Amaranth energy trader who lost $6 billionish for his old firm is now a consultant to a new commodities hedge fund run by private equity firm Peak Ridge Capital.  The fund, Peak Ridge Commodities Volatility Fund Segregated Portfolio, will specialize in natural gas, crude oil and electricity options.  He's said to be investing $10 million of his own money in the firm.

Sounds like his new firm is going to great lengths to insulate themselves, and not show that he's an official employee, no doubt because of all of the lawsuits that are swirling around him.  Hunter will provide advice through PRCV Consulting, an entity that he owns.  He'll be providing his services to Helmsmen Advisors, the new fund's Bermuda adviser.  We wonder if the rest of the would be Solengo crew is coming with him.  We're guessing 'yes'.

So Long-o, Solengo? Brian Hunter's new firm may close its doors without doing a trade

In an eighteen page document filed in federal court in Washington DC on Friday, former Amaranth energy trader and Solengo Capital founder Brian Hunter disclosed that his firm may already be close to toast.  Given all of the litigation filed against Hunter, two directors of his new venture have resigned and investor interest has evaporated:

According to Hunter, as a direct result of FERC’s order to show cause filed two weeks ago, Solengo has lost fund directors, investment staff and potential investors, and he has seen two other business deals go down the tubes.

“The FERC’s OSC has continued to damage Solengo Capital Advisors and the company is now on the brink of complete disintegration,” he wrote in the supplemental declaration, filed on Friday.

Hunter, of course, also faces a Commodity Futures Trading Commission enforcement action for attempted market manipulation, but he argues that the CFTC action is small potatoes—survivable, while the order from FERC, whose jurisdiction he rejects anyway, is potentially fatal.

The CFTC filed suit against Brian Hunter, who's filed suit against the FERC

Brian Hunter, the energy trader whose oversized natural gas trades plunged the now-failed $6 billion hedge fund Amaranth into the abyss, and who recently formed the new fund Solengo, is on the legal offensive with a preemptive strike against the FERC.  The agency had said on July 20 that they would bring an enforcement action against Hunter alleging price manaipulation in the natural gas market.   The FERC, according to Hunter's lawsuit, filed on Monday,  doesn't have jurisdiction which instead rests with the CFTC, and their interference threatens the existence of his new firm; he's asking for a temporary restraining order.    According to the documents, Hunter is a 60% owner of Solengo, of which he's the President.  And this morning news emerged that the CFTC filed a civil enforcement action against Amaranth and Hunter yesterday, alleging that they tried to manipulate natural gas futures prices.

FERC, which regulates the sale of physical natural gas, has been investigating trading activity at the failed hedge fund along with the Commodity Futures Trading Commission, the main futures-market regulator.

Mr. Hunter's legal action, filed Monday in federal district court in Washington, D.C., challenged FERC's "statutory authority" to bring an action. In it, he states that FERC informed him July 20 of a potential action alleging attempted market manipulation of natural-gas markets. He contends that FERC "is not statutorily authorized to regulate futures markets for energy commodities" and that this authority rests with the CFTC.

Natural gas trader sues Amaranth claiming they manipulated the market

A natural gas trader sued Amaranth, Nick Maounis and JP Morgan (its prime broker) alleging that the imploded fund manipulated the natural gas market which caused him to lose money.  The suit was filed in federal court in Manhattan seeks class action status. (That's a picture of Nick at left, circa 1976-1977 from his junior high yearbook, sent to us last fall by one of his former classmates after the shit hit the fan).

Roberto Gracey, who traded natural gas futures contracts, alleged that Amaranth amassed large positions, causing the price of natural gas futures contracts on the New York Mercantile Exchange and InterContinental Exchange to be artificial, according to the complaint in the U.S. District Court in Manhattan.

"When defendants' unlawful scheme of highly leveraged trading collapsed in September 2006, the price of natural gas and natural gas futures contracts traded on NYMEX experienced an almost unprecedented drop," the complaint alleged.

"Defendants' manipulative trading caused traders of natural gas futures contracts, including plaintiff, to suffer substantial losses," it said.

Natural gas trader sues hedge fund Amaranth - Reuters

Amaranth Advisors Sued Over Claims Of Gas Price Manipulation - Dow Jones via CNNMoney

Former Amaranth energy trader, now with Brian Hunter's new Solengo venture, gets to testify before the Senate

According to the witness list, former Amaranth trader Shane Lee, now with Solengo -- the new Brian Hunter hedge fund, will be testifying this morning at the 11 am Senate Subcommittee hearing on Excessive Speculation In The Natural Gas Market.:

High natural gas prices last year: A Senate report suggests that you can thank Amaranth's former trader Brian Hunter

A new Senate report lays the blame for high natural gas prices last year on Brian Hunter and his ill fated energy trading that caused Amaranth's implosion.  The report notes that before the failure the firm held as much as 40% of the open gas contracts on the NYMEX:

Hedge fund Amaranth and its star trader Brian Hunter built up such large positions in the US natural gas derivatives markets last year that they single-handedly sparked abnormally high gas prices for consumers across the US, a congressional report claims on Monday.

The report is the first to lift the lid on months of frenetic trading that eventually cost Amaranth over $6bn in losses and sparked renewed fears over a hedge funds meltdown.