NEW YORK – The founder of a hedge fund that lost about $6 billion because of bad energy trades said in a letter to investors this week the fund is preparing to shut down, according to a published report.
Nicholas Maounis of Amaranth Advisors LLC wrote that the fund is suspending all redemptions for Sept. 30 and Oct. 31 so that it could "generate liquidity for investors in an orderly fashion, with the goal of maximizing the proceeds of asset dispositions," The New York Times reported.
Messages left with Greenwich, Conn.-based Amaranth Friday were not returned.
As recently as Sept. 22, Maounis said in a conference call that he had hoped to stay in business.
"We have every intention of continuing in business and generating for our investors the same consistently high-risk adjusted returns which have been our hallmark, and we are fully committed to doing so," Maounis said.
But in the letter, he acknowledged that investors have asked for their money back in recent days. Redemption fees and charges will be waived once investors are allowed to take their money out, and cash will be distributed proportionately, the letter said.
Amaranth's implosion is one of the biggest hedge fund losses to date and comes as fund investment has poured into energy markets. The fund's energy desk had made significant bets on natural gas, but found itself in positions too large to liquidate this month after some prices fell.
Amaranth's energy and commodities portfolio was responsible for a big chunk of the fund's previous success, booking a $1.26 billion profit in 2005 and $2.17 billion for this year to the end of August.
It began incurring large losses in natural gas in the week starting Sept. 11, and on Sept. 14, Amaranth lost roughly $560 million on its natural gas position as prices for the commodity plummeted to a two-year low.