Brian Hunter, the Calgary-based energy trader largely responsible for about $6-billion (U.S.) in natural gas trading losses, is no longer with Amaranth Advisors LLC, the hedge fund confirmed yesterday.
The fund didn't disclose the circumstances of his departure. A spokeswoman said he hadn't been in the office all week and the company wouldn't provide any further details.
The departure comes after Amaranth's chief executive officer Nick Maounis told investors Friday that the company planned to get out of energy trading. The fund had previously invested more than half its capital in its energy business alone.
Sources close to the situation said Amaranth has not provided Mr. Hunter with any formal notification about his job status. Mr. Hunter declined to comment on the matter yesterday.
Amaranth was forced to exit its positions this month after a wrong-way bet in natural gas markets caused the fund to shrink to about $3-billion from $9.2-billion in a matter of days. Mr. Hunter, the trader who ran the energy group, had flown to Greenwich, Conn., to help manage the mounting crisis.
Mr. Maounis has said he wants the fund to stay in business. A press report yesterday, however, suggested the fund is in talks to either liquidate its remaining assets or sell itself to a larger institution.
Amaranth spokesman Shawn Pattison wouldn't comment on the report by the Financial Times, but reiterated that the company is "exploring all options." There was speculation last week that New York-based Citigroup Inc. was considering buying a stake.
In Canada, the flameout has left some wondering who might be next, given continued weakness in natural gas prices, which neared a four-year low yesterday.
"It wouldn't surprise me if another commodity complex was called to the mat, but I haven't heard anything," said Jim McGovern, founding chairman of the Alternative Investment Management Association. He said Canadian hedge funds don't typically have concentrations of more than 30 per cent in any one sector -- meaning they tend to be more diversified than Amaranth.
Mr. McGovern, who is also managing director and chief executive officer of Arrow Hedge Partners Inc., still expects the industry to grow "rapidly" in Canada in the years ahead, as foreign investors and institutional managers seek ever-higher returns.
In the U.S., meanwhile, U.S. Securities and Exchange Commissioner Paul Atkins said yesterday that no new regulations on hedge funds are needed, despite Amaranth's losses. He said the SEC's probe into whether Amaranth misled investors will continue -- but insisted that existing rules to prevent a widespread failure in the market had worked.
The New York Mercantile Exchange, for its part, wouldn't comment directly on whether the exchange had warned Amaranth that its natural gas bets were too big a month before its trading losses, as reported by Bloomberg.
The exchange did say, however, that it regularly keeps tabs on companies' positions in the market.
"As a normal course of business, as part of its self-regulatory responsibilities, Nymex routinely conducts market surveillance, which includes the examination of the margin levels and position limits of its customers for risk management purposes," the exchange said in an e-mailed statement.
© 2007 The Globe and Mail. All rights reserved.
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