The improbable happens.
That was part of the message from Nicholas Maounis, head of Amaranth Advisors, to investors in his battered hedge fund on Friday. Amaranth’s funds have lost $6 billion, or nearly two-thirds of their value, in recent weeks as once-profitable bets on natural-gas prices suddenly turned bad. The debacle has left Amaranth’s investors — many of whom face restrictions on when they can redeem their funds — desperate for information about the fate of their holdings.
On Friday afternoon, Mr. Maounis gave a much-anticipated update. In a brief conference call at 2 p.m. Eastern time, he said that his fund had every intention of staying in business and expressed regret for its recent losses — though he stopped of apologizing for the debacle. He took no questions from people on the call.
“We lost a lot of our own money this month,” he said. “We lost more of your money. We feel bad about losing our own money. We feel worse about losing your money.”
On the subject of Amaranth’s ill-fated energy trades, Mr. Maounis suggested that Amaranth was blindsided by a rare turn of events. “Sometime even the highly improbable happens,” he told investors. “That is what happened in September.”
The fund was hit especially hard on September 14, Mr. Maounis said. In that single day, the fund lost about $560 million on its natural-gas positions.
Many investors have asked for their money back, and Mr. Maounis said his firm had hired a lawyer from Skadden, Arps, Slate, Meagher & Flom to evaluate these requests. Still, he held out hope that investors would hang on. “We are determined to win back your faith,” Mr. Maounis said.