Lessons of Amaranth: Arrogance and greed

Sun Oct 1, 2006



Tough liquidity terms tied investors hands, and questions about risk management remain, but everyone loved the returns

When Amaranth founder Nick Maounis finally spoke to investors, via a conference call on September 22, he promised to explain what happened that caused the firm to implode last month. "We know we have damaged your faith and confidence in us, and we are committed to regain them both," he began the call.

But his plea may fall on deaf ears. The call came four days after Amaranth alerted investors to what so far has amounted to a $6 billion dollar loss that all but destroyed the firm, which as of July 1 had $9.1 billion in assets and ranked 23rd on Absolute Return's Billion Dollar Club. "I would never invest with him again," says one investor who began redeeming early this year but has not been able to get all his money...

ISSN: 2151-1845 / CDC10004H

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