Shades of Amaranth: Firm Makes Wrong Bets on Gas

Date: Tuesday, February 19, 2008
Author: HFN Daily Report

Houston-based hedge fund energy firm Saracen Energy Partners lost money betting that natural gas prices would go down, according to a Dow Jones report.

This was the same kind of bets on natural gas futures that blew up Amaranth trader Brian Hunter, except that Hunter placed trades that relied on prices going up. Before he was done, Hunter lost $6.6 billion, leaving a number of lawsuits and Congressional investigations in his wake.

Saracen's fund, which was reported to have $3 billion in assets before started unwinding its losing bets, would not confirm the size of the fund or amount of losses to Dow Jones. The firm did not return a call from HedgeFund.net seeking comment by press time.

Colder weather that hit the United States during the last part of January and on into February caused the spreads between the March and April contracts to widen, the Dow Jones report said.

Saracen was founded in 2004 by Neil Kelley and Michael Kutsch, former executives of Vitol Group, a European commodities trading firm.