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Amaranth's Slow Motion Contagion

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The dog that didn't bark last September finally seems to be finding it howl. When Amaranth Advisors imploded last year many were surprised that there was so little collateral damage. There were losses incurred by some of the investors in Amaranth, including some large pension funds, but no panic ensued and no other dominoes fell. It seemed that despite lots of talk about hedge funds posing a "systemic risk" the Amaranth collapse was an isolated event.
No longer. The Globe and Mail is reporting that the flagship fund of funds of Abria Alternative Investments Inc. has been brought down by Amaranths collapse.

The Abria Diversified Arbitrage Trust, which at its peak had assets of more than $150-million invested in various hedge funds, began its plunge after investors began demanding their money back in the wake of a loss of more than 8 per cent in September because of an investment in Amaranth.
In a bid to fund redemptions and stem further losses from Amaranth, Abria's managers sold two positions at a loss in December, leading to another monthly decline, this time 5 per cent, that fuelled demands from investors for their money back. Investors had to give 100 days notice for redemptions.
With the fund shrinking rapidly, and total assets headed toward $20-million as the redemptions piled up, it made little sense to go on, said Henry Kneis, chief executive officer of Abria.

Abria closes fund
[Globe and Mail]