In the wake of JPMorgan’s ill-conceived hedging strategy, which cost the bank its sterling reputation along with $2 billion and counting, Advanced Trading decided to highlight some of Wall Street’s worst bets ever.
May 21, 2012
6. Amaranth Advisors
Founded in 2000 by Nicholas Maounis, Greenwich, Connecticut-based Amaranth had a nice run over the first four years of its existence. At its height, the firm had $9 billion under management, much of which was earned with a successful convertible arbitrage strategy. But by 2004, it made the fateful decision to shift its focus to the energy market. At first it worked, with Calgary-based trader Brian Hunter earning a huge sum for Amaranth off successful bets on natural gas prices following Hurricane Katrina. But by 2006, Hunter lost the Midas touch. His bets on natural gas futures cost the firm more than $6 billion, leading to Amaranth’s ultimate demise.
