At least 83 funds closed shop in 2006, with energy
portfolios highlighted by Amaranth leading the way
In a year that experienced the largest-ever hedge fund
meltdown, at least 83 hedge funds closed their doors in 2006,
erasing about $35 billion in assets from the hedge fund world.
The largest shutdown, of course, was the spectacular collapse
of $9.1 billion Amaranth Advisors. Amaranth's record failure
boiled down to losing bets on highly leveraged natural gas
positions, but only two other significant liquidations came
from the energy sector. With 27 shutdowns, U.S. equity logged
the highest number of closings, which is not surprising given
that the sector is such a big one. Fixed income and high yield
also had a high casualty rate, with seven funds shuttered. And
the biotech sector stood out with six liquidations.
The largest implosions of 2006 - 9 funds with peak assets of