Interesting read on Energy board | OSTK Message Board Posts

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Msg  44089 of 44094  at  2/7/2018 10:40:35 AM  by

ICE


Interesting read on Energy board

From now on I will put up tickers on what is named
in the article and see if / when there is a volume spike
in these large firms. Could be a good way of '' try to
read '' the market.

Re: OT - XIV- plummets 80% after hours, sparking worries of bigger market effect

Lots of money being burned up in Bit-Coin, that is going to force selling elsewhere. Excesses get exposed in beat downs like this and often a hedge fund or two blows up. Sometimes you will see selling that is brutal day after day and it is only later that you find a hedge fund was caught leaning out over their skis in an ill-liquid market and someone like Goldman Sachs doing God's work gets wind of it. So they take the other side of the trade and just hammer the hapless hedge fund and ultimately force the other side to puke up their holdings for pennies on the dollar.

This kind of situation will cause a fund to puke up all sorts of holdings some not related to the situation that got them into the untenable position to begin with. Often it is the mega-cap stocks that really take it on the chin, like we saw in Exxon, Chevron and the Fang stocks. These are the kind of stocks that are very liquid and have a lot of value and so you can raise money quickly. When you get selling in the large names like we had today, that often means that someone is desperate to raise money quickly.

Attached is an Article on the Amaranth blow up, if I remember correctly because of Goldman's market making and brokerage activities they got wind of Amaranth extremely levered NGAS position and just beat the hell out of them:

Amaranth Advisors was one of the biggest hedge-fund blowups in history. Now, the fallen fund is approaching a new milestone: a decadelong wait to give investors back what remains of their money.

When Amaranth collapsed in September 2006 after bad multibillion-dollar bets on natural gas, investors were told redemptions would be temporarily suspended for two months.

The break has been considerably longer. Last week, investors were told redemptions would remain frozen through December 2016, according to documents reviewed by The Wall Street Journal.

It wasn’t immediately clear what was left to be returned by the once-$9 billion firm or why the delay had been so prolonged. The notice to investors reviewed by The Wall Street Journal and dated Dec. 24 noted only “the assets of the portfolios of the fund and the master fund will continue to be managed in order to effect an orderly wind down.”


The notice was sent from a Delray Beach, Fla., office suite, and calls to a phone number listed on the letter wouldn’t connect.

More than 90% of the set-aside investments in the main fund have been paid back, and a slice of what remains is cash or cash equivalents, a person familiar with the matter said. The stakes were recently offered on a secondary marketplace for around 50 cents on the dollar, another person said.

A portion of the remaining money belongs to Nick Maounis, the Amaranth founder who now runs an unrelated hedge-fund firm, a person familiar said. Mr. Maounis didn’t respond to requests for comment.

The accounting firm Ernst & Young LLP continues to work on valuing the remaining assets, the person said. An Ernst & Young spokeswoman wasn’t immediately able to comment.

Amaranth once was among the largest hedge funds in the world but it imploded in 2006 when its 32-year-old chief energy trader lost $5 billion in a week betting on natural-gas investments with borrowed money.

Related litigation from investors and regulators pressed on for years. In 2014, the trader settled with the U.S. Commodity Futures Trading Commission and agreed to pay a $750,000 fine and be banned from trading all CFTC-regulated natural-gas products.

The practice of blocking the exits has been rare since 2008, but in recent months some managers have stopped short of immediately paying back money investors asked to withdraw.

Third Avenue Management’s risky Focused Credit fund suspended redemptions earlier in December amid heavy losses, shocking investors and analysts with a move nearly unheard-of since the financial crisis. That followed a refusal by Claren Road Asset Management, the struggling hedge fund owned by Carlyle Group, to hand back the sum of their requested withdrawals this fall.

Stone Lion Capital Partners LP also took a similar move in its main hedge fund.

All three, which focus on relatively hard-to-trade credit instruments, have said they intend to pay back investors eventually, though they have yet to provide dates for the full return.

Write to Rob Copeland at rob.copeland@wsj.com

Corrections & Amplifications:
Hedge-fund firms D.E. Shaw & Co. and Eton Park Capital Management LP don’t have any long-term unpaid cash redemptions requested by investors. An earlier version of this article incorrectly said those firms were holding on to money that investors asked for years ago. (Jan. 1)


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