The Collapse of Amaranth Advisors

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Case Details:

Case Code : FINC063
Case Length : 18 Pages
Period : 2000-2009
Pub. Date : 2010
Teaching Note : Available
Organization : Amaranth Advisors
Industry : Investment Banking
Countries : US

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

Why Did it Happen?

Industry analysts attributed the collapse of Amaranth to several reasons. One of the strong reasons was the lack of stringent trading limits on ICE. ICE, which was an unregulated exchange, had helped Hunter to place bets without any position limits...

The Aftermath

In March 2007, San Diego County retirement fund, one of Amaranth's investors, sued Amaranth, alleging that it had lied to its investors about its investment strategies and made excessively risky and volatile investments...


Exhibit I: Brian Hunter's Background
Exhibit II: Natural Gas Futures Contracts of March 2006 and April 2006 (Maturity on Various Dates in 2005)
Exhibit III: Price of Natural Gas Futures Contracts November 2006, January 2007, March 2007 and April 2007 (Maturity on Various Dates in 2006)
Exhibit IV: Amaranth's NYMEX Futures Equivalent Positions (May 31, 2006 and August 31, 2006)
Exhibit V: Changes in Amaranth's Positions on NYMEX and ICE

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