There are trillions of dollars in hedge funds right now. This won’t be the only one to go down hard.
Amaranth Advisors, the $9.2 billion hedge fund that lost $6.5 billion in less than a month, is preparing to shut down.
Nick Maounis, the hedge fund’s founder, sent a letter to investors Friday night informing them that the fund was suspending withdrawals by investors to “enable the Amaranth funds to generate liquidity for investors in an orderly fashion, with the goal of maximizing the proceeds of asset dispositions.”
Investors have met with Amaranth throughout the week, many demanding the return of their money. “As you know, the multi-strategy funds have recently received substantial redemption requests,” Mr. Maounis said in the letter.
The letter marks a turnabout for Mr. Maounis, who just a week ago expressed hope at the end of a conference call that he would be able to continue the fund’s operations. “We have every intention of continuing in business, generating for our investors the same consistently high risk-adjusted returns which have been our hallmark,” he said on Sept. 22.
Whenever investors are allowed to take money out of the fund, any redemption fees and charges would be waived, the letter said. Cash distributions will be divvied up proportionately.
The fund has lost $6.4 billion, according to the letter, which said assets were down 65 to 70 percent for the month and 55 to 60 percent for the year. Amaranth started the year with $7.5 billion, soared to $9.2 billion before stumbling to less than $3 billion today.