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January 08, 2007

Restart : Amaranth Founder Looks for Second Chance

posted by MR WAVETHEORY at 1/08/2007 11:12:00 AM
After losing billions of dollars of investors' money, Amaranth founder Nick Maounis is trying to start a new firm.

According to a report in The Wall Street Journal, Maounis is teaming up with former colleagues to start a money management business. The firm will either manage money directly or help advise other funds.

Maounis is currently focused on winding down operations at Amaranth, which should be completed by the end of March. The fund was forced to close after losing billions of dollars in the course of about a week last September through a series of bad bets on the price of natural gas.

According to the Journal, Maounis has actually been expressing pride in Amaranth's risk management, even though the drop in gas prices that caused its demise had been foreseen by plenty of other players in the market who profited from Amaranth's fall. The Securities and Exchange Commission, Commodities Futures Trading Commission and Federal Energy Regulatory Commission have all been investigating Amaranth, but it is unclear if any of them will be taking regulatory action.

Despite the infamy of Amaranth's woes, its former employees seem to be having little trouble finding new jobs. Last month, Lehman Bros. hired former Amaranth trader James Scully as senior vice president for its prime services business and the Carlyle Group hired three Amaranth pros to join its new hedge fund unit, Blue Wave. Moore Capital Management opened an entire Canadian office with traders from Amaranth.

He wouldn't be the first big blowup to get a second chance.
John Meriwether led Long-Term Capital Management LLC, the Connecticut hedge fund that lost about $4 billion over several months in 1998 and roiled the markets. He now runs JWM Partners, LLC, a bond-oriented hedge fund that manages more than $2 billion. He and his colleagues began raising money for the fund just months after LTCM ran into trouble. Traders from Enron Corp. also are in demand, despite that energy trading company's collapse.

It was Canadian trader Brian Hunter who placed the wrong-way bet on natural gas that brought about the demise of the firm. Hunter has apparently not found a new job yet, but he might not need one. Amaranth reported paid the star trader $100 million the year before he wrecked the firm.

Not everyone thinks Nick should be given a second chance.

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