SHAMELESS!

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http://www.usatoday.com/money/markets/2007-03-23-amaranth_N.htm?csp=34

By Svea Herbst-Bayliss, Reuters
BOSTON — Brian Hunter, who engineered the biggest-ever hedge fund failure last year, is launching a new portfolio that analysts say will likely attract private investors ready to give the former star trader another chance.
Less than a year after Hunter's risky natural gas bets turned a $2 billion gain into a roughly $6 billion loss that sank Amaranth Advisors — once one of the world's largest hedge funds — he is launching Solengo Capital, papers show.

Would-be investors received offering documents this week for the new commodities fund, which will be based in Greenwich, Conn., home to hundreds of the world's estimated 9,000 hedge funds, and in Calgary, where Hunter lives.

Reuters obtained a copy on Friday.

The $1.9 trillion hedge fund industry had been buzzing for weeks about Hunter's rumored plans. Now people who advise managers and investors say private clients could be ready to turn a blind eye to Hunter's spectacular failure, while pension funds and endowments will likely steer clear of the new fund.

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"I would expect that a number of people who know him and have invested with him in the past may be very eager to get in again," said Christopher Holt, managing director of Holt Capital Advisors.

"As ironic as it sounds, these people would have had the chance to hear Hunter's explanation of what went wrong the last time and be assured that it won't happen again," said Holt, who advises hedge funds on finding clients. "The guys who come back from the dead actually have a pretty high success rate."

According to several hedge fund investors who asked not to be named, Hunter has close to $1 billion in commitments. Investors would have to keep their money with Hunter for two years and pay a 2% management fee plus a 20% performance fee, the prospectus says.

Shondell Sabad, who will be the new fund's chief operating officer and chief financial officer, declined to comment.

Hunter, who earned degrees in applied mathematics and physics and previously traded natural gas with Deutsche Bank in New York, had significant freedom at Amaranth, people familiar with his trading style said.

At Solengo, Hunter and former Amaranth colleagues Shane Lee and Matthew Calhoun — both are listed as portfolio managers on the prospectus — will still be able to direct the funds as they see fit, but there are risk controls.

"The portfolio managers will have total freedom to develop their business," the prospectus says. But if someone were to violate the capital to margin restriction, all capital locks would immediately be voided, "enabling investors to redeem immediately at no cost," the prospectus added.

Despite the new assurances, public pension funds, which invest retirement benefits for state workers and others, will likely avoid Hunter, especially after prominent funds from Massachusetts and California lost money in Amaranth.

"I don't think the funds of funds are going to get near him right now. He is not the A Team. He is not Morgan Stanley or Goldman Sachs or anyone else in that arena," said Peter Fusaro, Chairman of Global Change Associates, whose Energy Hedge Fund Center tracks these loosely regulated portfolios.

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Posted 37m ago