GREENWICH, Conn. — Institutional investors have been buzzing about losses at Amaranth Advisors LLC but have taken little action.
Institutional investor exposure to Amaranth on a plan-by-plan basis mostly is small. Most institutional investors have exposure to Amaranth through hedge funds of funds — which typically allocated 5% or less to Amaranth — rather than through larger direct investments, sources said.
On Sept. 18, executives at Greenwich, Conn.-based Amaranth rocked the investment world by announcing that soured natural gas bets caused performance to dip 35%, a loss of $3 billion. By the end of that week, Amaranth's assets, which had been $9.5 billion, reportedly dropped another $3.5 billion to about $3 billion, and the multistrategy hedge fund had sold its energy holdings to third parties.
Last week, Nick Maounis, Amaranth founder and chief executive officer, reportedly told investors that the firm will either be sold or liquidated. Shawn Pattison, an Amaranth spokesman, declined to comment about any issues relating to the firm.
"Clients not invested in Amaranth are obviously thankful and are largely shrugging their shoulders in the knowledge that this is not the first hedge fund to blow up," said Kevin Hocter, investment consultant, Bellwether Consulting LLC, Montclair, N.J. None of Bellwether clients was directly invested in Amaranth. "Informed investors are not very worried about Amaranth because the field (of hedge funds) and (range of) strategies is so broad. They are well aware that it's a ‘buyer-beware' market," Mr. Hocter said.
The funds with small exposures to Amaranth through hedge funds of funds that are not contemplating action at this time include $72 billion New Jersey Division of Investment; the $42 billion Massachusetts Pension Reserves Investment Management Board; the $30.2 billion Commonwealth of Pennsylvania Employees' Retirement System; the $4.6 billion Philadelphia Employees Retirement System; and the $1.7 billion Santa Barbara (Calif.) County Employees Retirement System.