The bankruptcy of Amaranth Advisors
Amaranth Advisors LLC was a multi-strategy hedge fund that managed $ 9 billion in assets. In September 2006 Amaranth went bankrupt, losing about $ 6 billion in one week in natural gas futures. The bankruptcy was the most important bankruptcy of a hedge fund.
In 2004-2005 the fund transferred most of its capital to the energy trading market. The price of energy depends on meteorological but also socio-political and economic factors.
His energy trader had made huge profits betting upward on natural gas prices in 2005, the year Hurricane Katrina caused serious damage to natural gas production and refining sites. leverage of 8, Amaranth had bet higher in March 2007. In fact the price fell seriously, causing Amaranth to lose $ 6.6bn