Amaranth's Maounis May Start New Investment Firm, People Say

Date: Friday, January 5, 2007
Author: Jenny Strasburg, Bloomberg.com

Jan. 5 (Bloomberg) -- Nicholas Maounis, whose hedge fund Amaranth Advisors LLC collapsed in September after losing a record $6.6 billion, may start a new investment firm, two people with knowledge of his plans said.

Maounis, 43, has discussed opening a company to manage money for clients or supervise investments by other hedge funds using Amaranth technology, said the people, who asked not to be identified because the talks are private. Former colleagues may join the venture, including James Nekos, who was in charge of the systems used by Amaranth to pick and manage investments.

Amaranth, based in Greenwich, Connecticut, is liquidating after wrong-way bets on natural gas caused the biggest blowup ever by a hedge fund. Even so, Maounis may find investors willing to support him.

``The market is wary of people who've had big losses, but both in markets and in life, failure is the best way to learn,'' Gordon Haave, director of Oklahoma City-based investment and consulting firm Asset Services Co., said in an interview. ``Those in the industry who know him best can place money with him.''

Maounis's plans were reported earlier today by the Wall Street Journal.

The Amaranth founder is focused on winding down the firm and returning capital to investors, according to spokesman Shawn Pattison. ``Like anyone in his position, he has been considering his future and discussing it with his close friends, colleagues and family.''

Maounis couldn't immediately be reached for comment. Nekos declined to comment, Pattison said.

Shutting Down

Amaranth plans to shut down by March 31, Maounis told Connecticut labor officials last year after its two main funds fell as much as 70 percent. Amaranth employed 420 people before its collapse. Assets peaked last year at $9.5 billion.

Amaranth was crippled when natural-gas prices dropped 26 percent in August and another 7 percent in September on the New York Mercantile Exchange. During one week in September, the firm's energy bets lost about $4.6 billion. The Canadian trader responsible for Amaranth's natural-gas investments, Brian Hunter, 32, no longer works at the firm.

Hedge funds are largely unregistered pools of capital that let managers participate substantially in gains on investments. Hedge funds globally control more than $1.3 trillion, more than double the figure five years ago, according to Hedge Fund Research Inc. in Chicago.

To contact the reporter on this story: Jenny Strasburg in New York at jstrasburg@bloomberg.net