It's been a pretty good year for Wall Street--from a bumper crop of buyouts to record-breaking gains. But there were some stumbling blocks--most notably in the commodities markets. The folks at Trader Monthly Magazine have compiled a list of the biggest--most brazen--and jaw dropping trades of the past 12 months. Randall Lane is Editor-in-Chief of Trader Monthly. He was on "Power Lunch" with the list.
Lane said that the failure of the Amaranth Hedge Fund was the biggest deal gone bad. Lane pointed to fund manager Brian Hunter's lack of understanding on where the price of natural gas was going. The firm lost $6.6 billion or 70% of the fund's assets in one week. Amaranth's collapse was the biggest in hedge fund history.
The flip side of Amaranth was Centaurus Energy and that hedge fund's manager John Arnold. Lane says Arnold understands energy (Arnold is a former trader at Enron). Centaurus made $1 billion from Amaranth's failure.
Another winner for 2006 was Goldman Sachs (we've been telling you about those big bonuses--here's part of the reason). Lane says their success pretty much came from one deal--the IPO of the Chinese bank ICBC. Goldman made some $4 billion on paper from that deal--in just 6 months. Lane says that's one of the biggest profit margins in that time ever.
