Remember that Houston-based energy fund we told you about yesterday? The one found itself on the wrong side of a natural gas futures trade? This morning the wires have named the fund as Saracen Energy, which matches what DealBreaker was told by readers yesterday.
“The spread between March and April 2009 natural gas futures leaped by more than 50 percent in the week between Feb. 7 and 14,” Reuters reports. For the year, it has almost doubled. Saracen had apparently went short March 2009 gas futures and long April 2009, and got crushed as the spread blew out.
How bad are the losses? Reuters says the fund lost up to $400 million. Platts says it’s more like $700 million to $800 million. Saracen denies rumors that it is selling its book to Goldman Sachs, and tells has sufficient liquidity to continue operations. But a 2006 report detailing the fund’s size before these losses put it at around $1.4 billion, meaning it may have lost half its assets under management in this trade. Amaranth, which suffered serious losses in 2006 after getting on the wrong side of the March-April calendar-spread bet, initially made assurances that it had enough funds to continue operations. Within a matter of days, Amaranth collapsed.
The losses are a major setback for Saracen. Earlier this year, Saracen lost a top trader, Bill Reed, to the Louis Dreyfus Highbridge Energy LLC, an energy trading operation launched by Highbridge Capital Management LLC and Louis Dreyfus Group.
Energy fund Saracen has big natgas trading loss [Reuters]
Posted by guest, Feb 15, 2008 12:36PM
Ummm...the last two paragraphs don't make sense.