Hedge fund whiz back on the Street

Date: Wednesday, October 18, 2006
Author: Sinclair Stewart and Boyd Erman, theglobeandmail.com

Manos Vourkoutiotis, the head of the Canadian arm of crumbling hedge fund firm Amaranth Advisors LLC, has already raised $800-million of seed capital to open a new fund, marking a lightning rebound from the destruction of Amaranth by ill-timed natural gas trades.

Moore Capital Management, the fund group founded by New York billionaire Louis Bacon, is the sole backer so far of Mr. Vourkoutiotis's new venture, according to people in the investment industry who are familiar with Mr. Vourkoutiotis's plans.

Mr. Vourkoutiotis is expected to raise more funds from other backers, and then will use additional money from lenders to amplify his investing power.

"I think he's pretty excited about it," said one Bay Street source.

The reappearance on the hedge fund scene of Mr. Vourkoutiotis comes as Greenwich, Conn.-based Amaranth is still in the process of winding up its operations.

The company lost an estimated $6-billion (U.S.) on disastrous wrong-way bets on natural gas by Calgary-based energy trader Brian Hunter.

But energy trading was not the only business that Amaranth conducted in Canada.

Under Mr. Vourkoutiotis, Amaranth's Canadian operations invested in a wide range of securities ranging from distressed debt to equities. The fund backed the recapitalization of grain handler Saskatchewan Wheat Pool Inc. and took a big stake in Cinram International Income Fund, which it pressed for a sale when it ran into trouble on its gas bets. Amaranth was also instrumental earlier this year in squeezing a higher takeover bid for fertilizer maker Royster-Clark Ltd. out of Agrium Inc.

Mr. Vourkoutiotis, a Toronto native who started his career at RBC Dominion Securities, has a reputation as a hard-working whiz. After RBC, he worked at Gordon Capital and then at Greenwich-based hedge fund Paloma Partners.

Nicholas Maounis, Amaranth's chief executive officer, broke away from Paloma six years ago to found Amaranth.

Moore Capital is also a familiar name in Canadian markets, as the fund has been investing in this country for more than a decade. According to recent filings with the U.S. Securities and Exchange Commission, Moore Capital has taken stakes in Vancouver-based Bema Gold Corp. and Toronto-based Brookfield Asset Management Inc.

The billionaire Mr. Bacon launched Moore Capital in 1989, and made a big score from correctly predicting the Persian Gulf War's effect on oil prices. Moore Capital has $10-billion under management, according to Forbes Magazine. A representative of Moore Capital yesterday declined to comment.

Speculation about the fate of Amaranth's Canadian operations has been rampant on Bay Street amid the drama of the fund's downfall.

Yet even as the parent company disintegrated, many in the investment industry said Amaranth's failure would have little effect on the job outlook for the firm's Canadian employees, and even that Mr. Hunter would probably have little trouble finding work.

Indeed, headhunters have been stalking Amaranth's downtown Toronto offices, some reportedly even impersonating Mr. Vourkoutiotis on the phone in an effort to get in touch with Amaranth personnel.

Mr. Vourkoutiotis may not even have to move to launch his new fund, as he is considering staying in Amaranth's Toronto office space, which is fresh from an elegant renovation that finished just before the firm's troubles began, sources said.