Previous Story
Trader Fact Files: Brian Hunter
Brian Hunter is known as the Amaranth Rogue Trader who made a big gamble on the natural gas futures market that went bad, causing his hedge fund to collapse. The Amaranth Advisors hedge fund had been around since 2000 and has built up a solid reputation before a one-week trading scandal led to its downfall in 2006.
Career
Hunter earned a master’s degree in mathematics from the University of Alberta, landing his first job at Canada-based TransCanada Corp before moving to New York to pursue a job in Deutsche Bank in 2001. In his first two years, he made $69 million for the bank and was eventually promoted to the head of the bank’s natural gas division in 2003.
In that same year, his trading group chalked up a $400 million loss in a week for an extremely risky position on natural gas, which Hunter blamed on an “unprecedented and unforeseeable” rise in gas prices. He also claimed that Deutsche Bank’s software had no restrictions for making such large gambles, adding that he still made $40 million for the bank in that same year and therefore deserved a bonus. Understandably, Deutsche Bank decided he should be let go from the firm.
Soon after, Hunter was invited to join SAC Capital Partners with a $1 million signing bonus. However, founder of Amaranth Advisors Nicholas Manouis wanted Hunter to be part of his hedge fund so he was named co-head of the firm’s energy desk.
In his first six months at Amaranth, Hunter reportedly made $200 million for the hedge fund. Among his famous profitable positions was the long natural gas futures trade when Hurricane Katrina disrupted natural gas production in 2005 and caused the commodity to triple in price. Years later, he was reportedly raking in $800 million for the firm from all his trades, earning him compensation of nearly $100 million in 2008.
The following year, Hunter predicted that gas prices will rise in the winter of ’06 and fall in the summer of ’07 so he went long on winter delivery contracts and short on summer contracts. The market behaved in an entirely opposite manner so the firm needed to cough up margin money in order to maintain its positions. However, these proved too costly to hold on to so Amaranth had no choice but to take its $6.6 billion loss and close shop.
Facts
Hunter and the Amaranth Advisors hedge fund were accused by the CFTC of manipulating natural gas prices but a two-day congressional hearing concluded that Hunter was not guilty of artificially propping prices up. He was then accused by the CFTC of trying to push prices down.
In 2007, Hunter tried to reenter the hedge fund world by forming a firm of his own called Solengo Capital Partners. However, regulatory agencies thwarted his efforts because of his questionable trading practices in the past. Hunter then sold Solengo’s assets to Peak Ridge Capital Group who then hired him to be an advisor to their Commodity Volatility Fund. This fund was up nearly 50% in 2008 while other hedge funds were down.
http://www.investopedia.com/articles/07/amaranth.asp
The post Trader Fact Files: Brian Hunter appeared first on Forex.Info.
Source:: Trader Fact Files: Brian Hunter
