New York Times -by Gretchen Morgenson and Jenny Anderson: Enormous losses at one of the nation's largest hedge funds resurrected worries yesterday that major bets by these secretive, unregulated investment partnerships could create widespread financial disruptions.
The hedge fund, Amaranth Advisors, based in Greenwich, Conn., made an estimated $1 billion on rising energy prices last year. Yesterday, the fund told its investors that it had lost more than $3 billion in the recent downturn in natural gas and that it was working with its lenders and selling its holdings "to protect our investors." Read the whoe article here.
What is it that makes these guys think they are bullet-proof? Any moron with half a brain could see that the energy complex had to correct back down into its prior support before it made a run back resistance. It's called consolidation. I swear, one of these days a hedge fund is going to blow up the whole world. And I bet it'll have something to do with CMOs and other engineered loan products designed to keep the housing boom running past its prime.
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