Hunter Gains With Infamous Strategy

Date: Tuesday, May 20, 2008

Using a strategy similar to one the he relied on at Amaranth Advisors LLC and that led to its collapse in 2006, a commodities hedge fund advised by energy trader Brian Hunter returned 17% last month, Bloomberg News reports.

The Peak Ridge Commodity Volatility Fund, which seeks to profit from price differences in the natural-gas market, has gained 138% since starting on Nov. 13, according to an investor letter obtained by Bloomberg. The HFRX Global Hedge Fund Index fell 2.4% during the same period, according to Hedge Fund Research Inc. in Chicago.

Peak Ridge Capital Group Inc., a private-equity firm in Boston, hired Hunter last year as a consultant after his bets on natural-gas price spreads triggered $6.6 billion of losses at Amaranth, the most by a hedge fund. In 2005, his trades generated $1 billion in gains for the Greenwich, Connecticut-based firm.

"To have lost that amount of money and get back into the market with a similar-type trade takes a lot of confidence, if not arrogance," Kent Bayazitoglu, an analyst at energy-consulting firm Gelber & Associates in Houston, told Bloomberg.