Hedge funds are pools of investment that invest in almost any opportunity in any market where they foresee impressive gains at reduced risk. Hedging refers to implementing strategies that manage or protect against an identified risk exposure. They take leveraged positions in publically traded equity, debt, foreign exchange and derivatives.
The primary aim of most hedge funds is to reduce volatility and risk while attempting to preserve capital and deliver positive returns under all market conditions (Friedland., 2008). Derivatives provide institutions the opportunity to break financial risks into smaller components and then to buy or sell those components to manage risk.
Hedge funds hold a number of assets; they use derivatives to protect against the adverse price movement of these assets. Hedge funds play more of the role of speculators than of hedgers. They use derivatives when buying and selling assets and by putting long-short positions, they seek to hedge themselves against broad market moves while profiting from changes in the relative value of the instruments they go long or short.
Hedge funds offer a variety of unique strategies to utilize when investing in hedge funds, these are called hedging techniques. These include Market Neutral Strategies, Event Drive / Special Situations Strategies, Long & Short, Global Macro, Sector and Country, Dynamic Strategies, Funds of Funds, Funds of Funds of Funds etc. (http://www.global-derivatives.com)
Market Neutral Strategies are used in Market Neutral Funds. They tend to take positions which offset each other through both a long and short position simultaneously to reduce their risk exposure. These strategies include Long – Short and Convertible Arbitrage. Long-Short methodology attempts to reduce market risk by taking both long and short positions in the market. This can be done by taking a long position in undervalued assed and a short position in overvalued ones. In these funds, it is anticipated that the undervalued assets will increase in value than any losses incurred from the overvalued assets, or vice versa. Convertible arbitrage is a relatively more complex strategy. In this convertible securities such as convertible bonds which can be converted into normal shares or bonds are bought, to take advantage of any price discrepancies between the convertible security and that of the exchangeable underlying. A position can be taken for buying convertible security or selling the underlying asset to realise any difference in prices. (http://www.global-derivatives.com)
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Event Driven / Special Situations Strategies intend to make profit from events related to particular companies. Event Driven funds take a bet that something in the future will happen which will affect the company and its assets in a particular way. These funds include Distressed Securities and Merger/ Risk Arbitrage; these securities include debt and equity of companies undergoing reorganization or bankruptcy, it is hoped that companies will recover and increase in value. These securities have very low value and can be given to the management of a company during the restructuring process. Merger/Risk Arbitrage funds tend to analyze companies which are potential takeover or merger targets by taking two positions. An example of it would be to buy the stocks of a company that is being acquired with hope that its prices will rise and to sell stocks of the company that is acquiring, in anticipation that its value might fall. (http://www.global-derivatives.com)
Long & Short is another strategy which includes buying and selling a security based on the sentiments in the market or of a company. It includes short selling, long, and growth fund. Short selling occurs when a person anticipates that the price will fall in future and sells a stock which it does not possess, through borrowing. If the price really falls in future, they buy the lot from the market at a lower price and return it to the one they borrowed from earlier at lower price, thus making a profit. Long is another strategy in hedge funds, it is a fixed income instrument that benefits from the rise in the price of the held asset. They often utilize leveraged positions to maximize returns.
Global Macro is an economics based strategy which intends to benefit from shifts in global economic conditions such as inflation, interest rates and other macro-economic factors; a common example of it is the use of interest rate derivatives for speculative purposes, they give profit from economic movements within particular countries.
Sector and Country strategies include sector funds and emerging markets. Sector funds are hedge funds that specialize within a particular industry for example technology, textile etc. these investments consist of long or short positions in stock, debt, or even derivatives on the stocks. Emerging markets include funds that emphasize on emerging markets with less-developed economies and aim to profit from market growth which influence the securities positively. Securities in these hedge funds include sovereign debt or corporate securities with the anticipation that their prices will rise with economic growth.
Dynamic strategies include elements such as market timings and opportunistic. Strategy of market timing involves the right timing of the market. It includes making profit based on the correct timing of investments across markets by moving between various asset classes depending upon the view of the manager regarding the market environment. Opportunistic strategy involves switching across asset classes, they use a number of strategies mentioned above depending upon the manager’s discretion, and the reason for switching strategies is to make the most profit. (http://www.global-derivatives.com)
‘Funds of funds’ is the strategy of hedge funds to invest in other hedge funds in order to diversify the risk and exposure. The success of these funds depends upon the manager’s way of handling the funds rather than the performance of the actual investments.
‘Funds of funds of funds or F3s’ is a new concept to hedge the risk exposure in terms of investments by reducing the volatility of the funds itself. They are good for high risk-averse investors willing to invest in the hedge funds industry. (http://www.global-derivatives.com)
Amaranth Advisors LLC (Amaranth)
Formation and Background
“Amaranth” comprises of Amaranth LLC and Amaranth Advisors LLC. It was founded by Nick Maounis (Maounis) in 2000 as a multi-strategy hedge fund with a special focus on convertible arbitrage (selling (short) equity stocks and at the same time buying (long) convertibles of the same company – creating a delta neutral portfolio), with its headquarter in Greenwich, Connecticut and with approximately $600 million in capital. Maounis experience was in managing a number of various arbitrage accounts in the US, Japan, Europe and Canada. The aim was to make profits from the small discrepancies in prices of stocks and bonds, through its structure of three principal funds – Amaranth Partners LLC, Amaranth Capital Partners LLC, and Amaranth International Limited and the 27 investment professionals. It sought to employ a group of arbitrage trading strategies particularly featuring convertible bonds, stocks of merging companies and utilities. However, Over the years, the trading activity of Amaranth expanded into merger arbitrage (making a riskless profit by purchasing individual stocks of two merging companies and selling them together), leveraged loans (loans given/extended to individuals or companies that already have large debts on their books), blank-check companies (developing companies) ,volatility trading arbitrage (buying or selling an option on an underlying instrument and selling or buying a varying percentage of the underlying instrument – this to gain from the difference between the implied volatility of an option and forecasted future probable volatility of the corresponding underlying instrument), long/short equity, and energy trading. (ICMR, 2010)
Strategy
As noted above, at the time of formations and throughout its term, the firm emphasized that it was a multi-strategy hedge fund, but as it could be noted in the aftermaths that most of the firm’s investments and losses were in natural gas derivatives.
Amaranth’s basic strategy comprised of trading in the Natural Gas market; the firm took a long position in winters, with hope that the prices will rise, especially when the demand for natural gas exceeds the supply and storage capacity due to the cold season. Its winter months were November, December, January, February and March. Amaranth used to take a short position in summers when it anticipated that the prices will fall. Part of its strategy also included taking short position in April and long position in March. Moreover, another strategy was to purchase call options on winter months and put options on non-winter months.
Amaranth used to bet that natural gas prices will rise, and the spreads in March and April prices will rise as well.
Nature of Natural Gas Market
By nature, the natural gas market is very risky and volatile. Majorly because there is a commercial need for the commodity. This situation creates a need for an institution to control its supply and storage.
In America, there has been inadequate storage capacity of natural gas for peak the winter season demand. Therefore the price of natural gas is higher in winters; firstly due high demand and secondly due to increase the incentives to store natural gas. These factors raise the prices of winter natural gas contracts to an all time high level.
Apart from that, the market of natural gas is also volatile because the natural gas production in America is lower than the rise in the demand for natural gas. U.S. Natural Gas markets are shielded from the global energy factors because a very small amount of US natural gas need are met by imports of Liquid Natural Gas (LNG).
Commodities trades require less margin money (collateral) than other markets. On the main exchanges, trades post 10 percent of their position’s value, whereas in the stock market, 50 percent is common. (Davis, Sender, & Zuckerman, 2006). After gaining credit from banks, it is very easy for commodity hedge funds to get highly leveraged quickly.
Traders of natural gas have a number of options. The largest exchange for trading natural gas is the NYMEX (New York Mercantile Exchange) which has standardized futures contracts up to few delivery months up to 5 years that are traded on the exchange. Traders can also use ICE (Intercontinental Exchange) which is an over-the-counter market for trading natural gas futures contracts.
There has been a lot of debate if hedge funds have an impact on energy trading. According to Gary Gensler (a former Goldman Sachs banker and treasury department official and chairman of the Commodity Futures and Trading Commission (CFTC) – the chief regulator for energy futures energy trading said ” I believe that excessive speculation in commodity futures can cause sudden or unreasonable fluctuations or unwarranted changes in commodity prices,”. He also expressed his opinion that the rapid growth of commodity index funds and increased hedge fund allocation to commodity assets contributed to the bubble in commodity prices. (Delamaide, Jan 11, 2010)
Performance
The founder’s original expertise was in convertible bonds (Till, 2006). The firm later specialized in leveraged loans, blank-check companies and in energy trading. Till June 30th 2006, energy trades accounted for about half of the fund’s capital and generated about 75% of their profits. (Till, 2006)
In 2002 Amaranth started trading with JP Morgan Chase, in energy commodity trading.
The winters of 2003 were exceptionally cold and lasted till February, this raised the prices of natural gas manifolds, and this in turn gave huge profits to Amaranth due to its long position in winters. By 2004-5 Amaranth shifted most of its investments into energy trading. The company used to make huge profits from placing spread trades and placing bullish bets on energy in 2005. In the same year America was severely hit by Hurricane Katrina, which adversely impacted it natural gas and oil production and refining capacity. This raised the price of natural gas and Amaranth reaped huge profits out of it.
The accounts of Amaranth LLC showed robust performance by the company since its inception. The compound annual return for the period September 2000-November 2005 according to media reports was 14.72 net of all costs. (Gupta & Kazemi)
The chart below shows Amaranth’s returns till May 2005. The chart compares the Amaranth’s returns against CISDM Equal Weighted Hedge Fund Index and CISDM Convertible Arbitrage Index. Amaranth had gained a noteworthy position in May 2005, in CISDM Equal Weighted Hedge Fund Index. The chart show the volatility Amaranth was facing in May 2005, this volatility had brought high returns in the past but things then started taking the turn towards the wrong side.
Amaranth’s returns; source: (Gupta & Kazemi)
NYMEX (New York Mercantile Exchange) noticed Amaranth’s considerable open interest of 51% in Aug 2006 in September natural gas futures contract, which would expire at the end of the month. NYMEX (New York Mercantile Exchange) brought its concerns into notice to Amaranth. Amaranth not only reduced their September but also October’s positions, as per the directions of NYMEX (New York Mercantile Exchange). Alongside Amaranth increased their positions in October and September positions under ICE contracts, thus escalating their overall positions in natural gas. (Gupta & Kazemi)
According to US Securities and Exchange Commission filings, investors in Amaranth’s funds included a number of Wall Street banks including Morgan Stanley, Credit Suisse Group and Deutsche Bank AG. (Burton & Leising, 2006)
Amaranth was marketing energy and commodities fund to open in December 2006 of about $5 billion. The fund was to be managed by Hunter and Jeff Baired, co-head of Amaranth’s Global energy and commodities business. But unfortunately the events that followed didn’t allow it to happen. (Burton & Leising, 2006)
Collapse and Beyond
Amaranth used to bet that natural gas prices will rise, and the spreads in March and April prices will rise as well. However in 2006, so did not happen and gas prices began to decline due to rising inventories leaving Amaranth on the wrong side of the market trend and consequently reducing its portfolio value of $9.2 billion by less than half.
Headed by Brian Hunter, it seemed that Amaranth had not anticipated the rise in the natural gas storage capacity, and the weather pattern bringing a warmer winter.
It was in a week’s time that Amaranth lost 65% of its $9.2 billion assets. On September 14 alone, the fund lost $681 million from its natural gas exposure.
On September 20th 2006, Amaranth sold its entire energy trading portfolio in a flurry to J.P. Morgan Chase and Citadel Investment Group. It did so at significant discounts to the portfolio’s then mark-to-market value. (Till, 2006)
At the time of liquidation of Amaranth, the spread on gas future declined. The spread on positions held by Amaranth were $2.85 in late August, but after the liquidation had reached below $0.75. (MORGENSON & ANDERSON, September 20, 2006). This indicates the lower price expectations in both the bid and ask price for every $1 invested in Amaranth’s holdings.
When Amaranth Advisors LLC announced that it had suffered losses just as big as LTCM’s, markets did not respond for Amaranth the way as they did for LTCM (Long Term Capital Management). New York Fed did not hold summit meeting for a bailout plan; but JP. Morgan & Co. and Merrill Lynch & Co started selling off Amaranth’s portfolio of natural gas futures. The co-founder of Energy Hedge Fund Centre (which tracks 520 energy funds) said, “There is not systematic risk. The market can absorb this.” (Mufson, 2006).
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The reasons for such a reaction were that, firstly Amaranth (although was doing rash trading) but borrowed less heavily and had less leverage than LTCM (Long Term Capital Management); secondly its positions were smaller and focused in natural gas futures. LTCM ‘s failure threatened the stability of banks, whereas Amaranth’s failure only hurt imprudent investors in the natural gas market who hadn’t done any research before investing.
Amaranth’s co-founder and chief executive, Nicholas Maounis, said in his letter to investors that the fund was “aggressively reducing our natural gas exposure” to meet payments to creditors. The said that there was large scale fluctuations in the value of the fund, which was up sharply in August, would be down 35 percent for the year after the sell-off. Later Maounis said that the conditions in the natural gas market deteriorated and market liquidity dried up so quickly that the fund was unable to unwind its energy positions. He said “it became clear that we couldn’t trade out of it. Amaranth had no choice but to sell its positions at a huge loss because the fund was faced with margin calls and couldn’t borrow anymore because of the liquidity problem that emerged once news of its losses hit the market.
Maounis apologized to the institutional investors, pension funds and wealthy individuals who lost money as a result of the bad trades. He said “We feel bad about losing our money. We feel even worse about losing your money.” (CBC-News, 2006)
Officially at Amaranth desperately tried to sell the fund to Citigroup. But despite the extensive talks and negotiations, Citigroup decided to walk away from making any deal. (Taulli, Sep 29th 2006 )
On July 25, 2007, the Commodity Futures Trading Commission (CFTC) charged Amaranth and head energy trader Brian Hunter with Attempted Manipulation of the Price of Natural Gas Futures including making false statements to the New York Mercantile Exchange (NYMEX). The Federal Energy Regulatory Commission has also charged Amaranth and its traders with market manipulation. Amaranth filed a lawsuit against JP Morgan claiming US$ 1 billion in damages, on the grounds that the bank interfered in the company’s work to make a deal with Goldman Sachs and Citadel Investments.
The Federal Energy Regulatory Commission (FERC) later announced a settlement with Amaranth’s defendants. However Commodity Futures Trading Commission (CFTC) did not withdraw its charges on Amaranth and on August 12, 2009, the federal court ordered Amaranth to pay a $7.5 million civil monetary penalty. The court also enjoins Amaranth from violating the anti-manipulation provisions of the Commodity Exchange Act. (Release, 2009)
Amaranth then sued Touradji and his employees (Touradji Capital Management LP), by filing a complaint on September 18, 2006 in New York Supreme court in Manhattan, seeking at least $350 million for claims including breach of contract and misappropriation of trade secrets. Amaranth says that Touradji Capital Management LP breached two contracts agreed to in September 2006 regarding the transfer and purchase of Amaranth’s base-metals portfolio.
According to the official documents, Touradji Capital Management LP used the information “to recover profits obtained by defendants through improper trading practices and misuse of plaintiff’s propriety and confidential information.” Maounis, through a spokesman, refused to comment on the Touradji Capital Management LP suit (Chanjaroen, 2006). However in September 2009, Amaranth withdrew the summon it filed against Touradji Capital Management. Neither of the parties made a payment of any kind due to the withdrawal of notice.
After the fall of Amaranth, Goldman Sachs was quick to come into action, and struck a deal to take over hedge fund manager of Amaranth Advisor LLC’s lease at Greenwich America.
Goldman occupied about 124,000 square feet at the property, which had served at Amaranth’s headquarters before the company was wound up in September. Amaranth’s lease was to expire in at the end of 2015 and had a rate of about $35 per square foot. (Ambroz, April 10, 2007)
Internal control or Management of Amaranth
Maounis’s original expertise was in convertible bonds. In mid 2004 Maounis hired Brian Hunter (Hunter) an energy trader who was working for Deutshe Bank energy trading desk. Calgary-based Hunter was Amaranth’s head energy trader, who was given a free hand to trade the commodity market, due to his past experience of taking huge positions and making huge profits in the natural gas market. Maounis was impressed that Hunters made hundreds of millions of dollars (around 1 billion) for the firm in 2005 after Hurricane Katrina sent natural gas prices soaring, made the 32-year-old Canadian a co-head of commodities trading. Maounis let Hunter increase the size of his natural gas positions so that they became more than half of the entire firm’s exposure. This was against Amaranth’s claim of maintaining a multi-strategy fund.
Before Hunter’s arrival, all commodities positions made up about 20 percent of Amaranth’s portfolio with natural gas having roughly 7 percent share.
Amaranth’s partners had a confidence built on past success and they thought that they had a fool-proof strategy (taking long position in winters and short in summers); the company had reaped huge profits in 2002-2005 from this strategy.
Amaranth’s website said “moving nimbly and effectively within an ever-changing investment landscape” and said that its employees “possess fearlessness with respect to complexity, learning, as well as invention, and continuously strive for perfection.” Maounis, said he had chosen the company’s name, which means unfading” in Greek.
According to the wall street journal, Brian Hunters had so much success in trading natural gas futures, or bets, on the future prices of the commodity, that Amaranth allowed him to work from his home in Calgary, where he drove a Ferrari in summer and a Bentley in winters. (Hedge fund: a gamble too far, 2006, September 20). Analysts estimate that in order to fund his positions, Hunter was borrowing $8 for every $1 of Amaranth’s own funds. When the bet went in his favour, he could pay back the debt and keep the rest of the profit for Amaranth. As the bets started to go against him September 2006, his borrowing amplified his losses. (Hedge fund: a gamble too far, 2006, September 20). It is commonly believed that hedge funds improve the efficiency of the financial markets by introducing liquidity and innovation (Hedge fund: a gamble too far, 2006, September 20). However Amaranth’s collapse shows that the hedge fund managers earn for their lavish salaries only and not for the investors who have put up their earnings and savings in their funds.
Operational risk is the risk associated with the internal management of the company and the probability of making wrong decisions that might harm the performance of the firm. Amaranth seemed to be suffering highly from operational risk. Hunters had a target of making $2 billion for the year at the end of August 2006. Analysts comment of such a target that Hunters must have had “an unconsciously large position for this market,” One of the biggest players in the energy markets, such as Goldman Sachs Group, would take up positions less than a tenth as big as Hunter’s, traders said.
Hunter was involved in rash trading in the market as his positions were often twice as big as the next biggest. It is also said that in Amaranth, there was an exclusive risk manager for every trading book, who sat with the risk takers on the trading desk. (http://www.icmrindia.org/casestudies/catalogue/Finance/Collapse-Amaranth%20Advisors-Case%20Studies.htm#Risk_Management)The risk managers were well qualified and had advance degrees.
Paul Touradji, founder and managing partner of Touradji Capital Management, said was “obvious about risk control” and not about commodities. Touradji admitted that he exited the natural gas market for a year because Amaranth had entered the market, comparing its presence with that of well-financed poker player sitting down with poorer players and making big bets. “I can’t think of a right counterstrategy other than to say, ‘I am going to be at the bar until you’re done,” Touradji said. (http://www.hedgefundintelligence.com/Event.aspx?ProductID=7035&ElementID=4983, 2006)
Problems
Diversification is the key element of all investment portfolios. It reduces the unsystematic risk of instability in any part of the economy. Amaranth specialized in the natural gas industry so much that it failed to realise that if it took any incorrect venture at any point in time, it would not have to face severe consequences. This is counted as a factor of poor risk management.
One of the biggest issues with hedge funds is that there is lack of transparency for investors and they have no idea as to what the fund is doing with their money. Most hedge funds make money with the performance fees that are generated when the fund achieves larger gains; the bigger the gains the larger the fees for the hedge funds. If the funds stays still or falls, the performance fee is exactly the same. This type of fee structure can force hedge fund traders to implement exceedingly risky strategies.
Much of the blame for what happened to Amaranth is being put on Brian Hunters, although he had a strategy, experience and understanding in the natural gas market; which worked well with various weather shocks, but the fund manager failed to take into account the rise in storage capacity of natural gas. The arrival of a relatively warm winter did not raise the demand of natural gas as much as in the previous years. These factors did not increase the price of natural gas as much, thus creating problems for Amaranth which has a long position.
Amaranth was operating on a high leverage. As told earlier, Amaranth was operating on an 8:1 of debt to equity ratio. This amplified the credit problems for Amaranth because once it started facing liquidity problems; it ran out of cash to maintain its cash flows.
After its collapse but before liquidating, Amaranth placed restrictions on its investors to withdraw holdings of cash. That is, they were allowed to withdraw for certain number of days but were required to submit the amount before the end of the term because inability to do so resulted in a penalty. Investors were not allowed their savings beyond 7.5% of their savings. (MORGENSON & ANDERSON, September 20, 2006).
The bankruptcy of funds causes damage to a number of individuals and companies that have their stake with them. In the Case of Amaranth, Morgan Stanley, invested $126 million, or about 5 percent, of its $2.3 billion funds of hedge funds in Amaranth. Even New York Fed Governor Timothy F. Geithner warned that hedge fund failures could hurt market participants other than those investors and lenders who have chosen to do business directly with those funds. (Mufson, 2006). This is because the instability created in the market (because of the bankruptcy of the company and the loss of a lot of people) can result in a systemic risk, which influences other sectors as well.
It is commonly said that Amaranth’s systems did not measure risks correctly and did not take steps that would reduce the risk. The risk models that were employed by hedge funds use historic data, but the natural gas markets in 2006 were more volatile than any other year since 2001, making models less useful. A managing director of Lyster Watson & Co, an advisory firm that invests in hedge funds for clients but not with Amaranth said, “It was a total failure of risk control to put your entire business at risk and not seem to know it. They were more leveraged than they realised”. (Davis, Sender, & Zuckerman, 2006).
Lessons to be learnt
Derivatives as we know are risky sources of investments, and there a number of lessons that one can learn from the incident of Amaranth. Before making an investment (esp. in sector fund) it is important to analyze the performance of the sector relating to the profits and losses, during the past few years. A monthly sector analysis reveals that a -24% monthly loss is normal and the monthly volatility of the energy strategies was around 12% (Till, 2006), therefore due consideration should be made by investors before investing in such an industry.
The second factor that fund managers should consider is of marketability or liquidity, which is the ease with which the contracts can be sold into the market again. The exchange traded futures market of natural gas contracts is way smaller than the over-the-counter natural gas positions. This should put the question in investor’s minds that in case the market of natural gas declines so how will they sell their contracts and liquidate their position. The strategy of Amaranth did not include an ‘exit’ strategy. The following case of MotherRock also proves this point.
Before the fall of Amaranth, on August 2, 2006 MotherRock, a natural-gas-oriented hedge fund had announced that it was shutting down, its losses had reached up to $300 million; it had made a wrong short position and was therefore forced to liquidate due to mounting losses. This should have sent alarming bell to the investors in Amaranth to secure their position in the market and they make sure that the don’t face liquidity risk in near future (liquidity risk explained later).
All successful investors have an exit strategy as part of their main strategy; liquidity is one of the four core factors to consider when investing in the market, these factors are risk, return, liquidity and maturity. Liquidity risk includes the risk that liabilities cannot be met when they fall due and can only be met at an uneconomic price. This risk can be accounted for by widening the bid/offer spread. An institution might lose liquidity if its credit ratings fall, it experiences sudden unexpected cash outflows or some other event that causes the counterparties to avoid trading with or lending to the institution. A firm can also be exposed to liquidity risk if markets on which it depends are subject to loss of liquidity. Liquidity risk tends to compound other risks. If a trading organization has a position in an illiquid asset, its limited ability to liquidate that position at short notice will compound its market risk. Suppose a firm has offsetting cash flows with two different parties on a given day. If the counterparty that owes it a payment defaults, the firm will have to raise cash from other sources to make its payment. Should it be unable to make its payment, it will default too. Here liquidity risk is compounding credit risk. A position can be hedged against market risk, through diversification of the portfolio by including assets with different unsystemic risks, but still has liquidity risk.
Amaranth’s investments were high-risk funds that lacked liquidity due to the nature of the natural gas futures market. They did not have any counter party to take their position under a week, when they needed it most. One reason that can explain this liquidity problem is that the counter parties had already locked their position in the forward contracts relating to production or storage. It seemed that due to their past experience, of success in assuming long position in winters and short position in summers, Amaranth failed to anticipate the liquidity risk they were getting into by being unable to find a counter party. (Till, 2006). This was the job of the funds risks managers to employ scenario analysis based on this past events. Taking all the factors mentioned above proves that Amaranth was taking immense risk with respect to liquidity.
Amaranth was giving the natural gas comodity market a service by providing liquidity to the participants who cou
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