Santa Cruz Sentinel – In a spectacular blowup, Amaranth Advisors LLC lost $6 billion of its $9.5 billion of assets in a single month. The fund achieved this feat by making a highly leveragedwrong-way bet on the direction of natural gas prices. The fund may incur further losses as it liquidates its remaining assets.
Elsewhere, Vega Asset Management has seen assets shrink from $12 billion two years ago to $3 billion today. Vega has been laid low by a combination of poor performance and client defections. Vega’s recent bet that interest rates around the world would increase has gone sour. With interest rates falling, Vega’s flagship Select Opportunities Fund lost 11.5 percent in September and is down 17.5 percent so far this year.
What do these and many other hedge funds have in common?
