Just two days after admitting it lost $6 billion US onbad bets on natural gas prices, the Amaranth Advisors hedge fund said it's out of energy trading for good.
Amaranth founder Nicholas Maounis told investors on a conference call Friday that the fund will stay in business, butwill be making changes.
"As a first step in the recovery process, we are eliminating energy trading from our strategy mix," Maounis said.
It wasn't unusual for Amaranth to have a large energy exposure, Maounis said, pointing out that the fund had made more than $2 billion US in profits from energy trades in the first eight months of this year.
But earlier this month,Amaranth's natural gas exposurecost the fund and its investors dearly.
'We feel bad about losing our money. We feel even worse about losing your money.'-Amaranth founder Nicholas Maounis
Maounis saidconditions in the natural gas market deteriorated and liquidity dried up so quickly that the fund was not able to unwind its energy positions.
"It became clear that we couldn't trade out of it," he said.
Maounis said Amaranth had no choice but to sell its positions at a huge loss because the fund was faced with margin calls and couldn't borrow any more because of the liquidity problem that emerged once news of its losses hit the market.
Maounis apologized to the institutional investors, pension funds and wealthy individuals who lost money as a result of the bad trades.
"We feel bad about losing our money," he said. "We feel even worse about losing your money."
Maounis said the firm will soon disclose a plan for investor redemptions.