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'''MotherRock''' was an energy sector [[hedge fund]], one of the biggest traders of [[natural gas]] [[Derivative (finance)|derivatives]] in New York, with [[assets under management|assets]] of around $430 million at one point.<ref name="Forbes">{{cite news|author=Liz Moyer|year=2006|title=Energy Hedge Fund Bites The Dust|accessdate=2007-12-19|url=http://www.forbes.com/business/2006/11/10/ritchie-hedge-fund-shutters-biz-cx_1110ritchie.html|deadurl=yes}} {{Dead link|date=May 2011|bot=RjwilmsiBot}}</ref> It closed in August 2006, the prime cause of which was attributed to the high [[volatility (finance)|volatility]] in [[natural gas]] valuations in the commodities market.
'''MotherRock''' was an energy sector [[hedge fund]], one of the biggest traders of [[natural gas]] [[Derivative (finance)|derivatives]] in New York, with [[assets under management|assets]] of around $430 million at one point.<ref name="Forbes">{{cite news|author=Liz Moyer |year=2006 |title=Energy Hedge Fund Bites The Dust |accessdate=2007-12-19 |url=https://www.forbes.com/business/2006/11/10/ritchie-hedge-fund-shutters-biz-cx_1110ritchie.html |url-status=dead |archiveurl=https://web.archive.org/web/20070125010122/http://www.forbes.com/business/2006/11/10/ritchie-hedge-fund-shutters-biz-cx_1110ritchie.html |archivedate=January 25, 2007 }}</ref> It closed in August 2006 due losing money on its bets that natural gas prices would fall.<ref name="NewYorkTimes2006September19MorgensonGretchen" /> In 2006 the summer heat led to prices increasing and in June 2006 MotherRock Energy Fund lost 24.6 percent and then in July 25.5 percent.<ref name="NewYorkTimes2006September19MorgensonGretchen">{{cite news|last1=Morgenson|first1=Gretchen|last2=Anderson|first2=Jenny|title=A Hedge Fund's Loss Rattles Nerves|url=https://www.nytimes.com/2006/09/19/business/19hedge.html|accessdate=8 January 2020|agency=The New York Times Company|issue=Business Day|page=C1|work=New York Times|date=19 September 2006|location=New York, N.Y., United States|language=English|url-access=limited}}</ref> Leveraged positions exacerbated the situation and eventually led to a loss of around $230 million in June and July 2006.<ref name="TheStreet">{{cite web|author=Staff Reporters|year=2006|title=MotherRock Cries Uncle|accessdate=2007-12-19|url=http://www.thestreet.com/_googlen/newsanalysis/energy/10301570.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA|archive-url=https://web.archive.org/web/20080112164248/http://www.thestreet.com/_googlen/newsanalysis/energy/10301570.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA|archive-date=2008-01-12|url-status=dead}}</ref>
While the high volatility took its toll on MotherRock, its leveraged positions exacerbated the situation and eventually led to a loss of around $230 million in June and July, 2006.<ref name="TheStreet">{{cite web|author=Staff Reporters|year=2006|title=MotherRock Cries Uncle|accessdate=2007-12-19|url=http://www.thestreet.com/_googlen/newsanalysis/energy/10301570.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA}}</ref>


==History==
The fund was started by [[J. Robert Collins]], with Conrad Goerl and ex-NYMEX vice president [[John D'Agostino (hedge fund manager)|John D'Agostino]] in early 2005.<ref name="MarketWatch">{{cite web|author=Alistair Barr|year=2006|title=MotherRock hedge fund shutting down: WSJ|accessdate=2007-12-19|url=http://www.marketwatch.com/News/Story/91c6sWLJ6WmsdMmWBZRnWx3?siteid=google&dist=TNMostMailed}}</ref>
The fund was started by [[J. Robert Collins]], with Conrad Goerl and ex-[[NYMEX]] vice president [[John D'Agostino (hedge fund manager)|John D'Agostino]] in early 2005.<ref name="MarketWatch">{{cite web|author=Alistair Barr|year=2006|title=MotherRock hedge fund shutting down: WSJ|accessdate=2007-12-19|url=http://www.marketwatch.com/News/Story/91c6sWLJ6WmsdMmWBZRnWx3?siteid=google&dist=TNMostMailed}}</ref>


== Senate Findings ==
== Senate findings ==
When investigating sudden price movements in the natural gas markets, and specifically the role [[Amaranth Advisors]] played in these movements, it was ascertained that Amaranth's aggressive trading was the only reason for MotherRock's collapse.<ref>[http://hsgac.senate.gov/_files/062507Report.pdf "Excessive Speculation in the Natural Gas Market"], United States Senate Permanent Subcommittee on Investigations, June 25, 2007
When investigating sudden price movements in the natural gas markets, and specifically the role [[Amaranth Advisors]] played in these movements, it was ascertained that Amaranth's aggressive trading was the only reason for MotherRock's collapse.<ref>[http://hsgac.senate.gov/_files/062507Report.pdf "Excessive Speculation in the Natural Gas Market"] {{webarchive|url=https://web.archive.org/web/20070726050107/http://hsgac.senate.gov/_files/062507Report.pdf |date=2007-07-26 }}, United States Senate Permanent Subcommittee on Investigations, June 25, 2007
</ref><ref name ="Bloomberg">{{cite news|author=Matthew Leising|year=2007|title=Amaranth Trading Led to MotherRock Loss, Senate Report Says : Bloomberg |url=http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEeMFC2u8rWM|date=2007-06-25}}</ref>
</ref><ref name ="Bloomberg">{{cite news|author=Matthew Leising|title=Amaranth Trading Led to MotherRock Loss, Senate Report Says : Bloomberg |url=https://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEeMFC2u8rWM|date=2007-06-25}}</ref>


In a larger picture, it was found that Amaranth could distort market prices through large trades. On July 31, 2006, Amaranth's trading caused a 72% jump in the price spread that directly affected MotherRock's positions so badly that the latter could not meet its [[margin call]]s. MotherRock folded soon afterwards.
It was found that Amaranth could distort market prices through large trades.{{citation needed|reason=seems like a first person account|date=December 2015}} On July 31, 2006, Amaranth's trading caused a 72% jump in the price spread that directly affected MotherRock's positions so badly that the latter could not meet its [[margin call]]s. MotherRock folded soon afterwards.


== References ==
== References ==
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{{Hedge funds}}
{{Hedge funds}}


[[Category:Hedge fund firms in New York City]]
[[Category:Defunct hedge funds]]
[[Category:Defunct hedge funds]]
[[Category:Defunct financial services companies of the United States]]
[[Category:Defunct financial services companies of the United States]]
[[Category:Companies established in 2005]]
[[Category:Financial services companies established in 2005]]
[[Category:Companies disestablished in 2006]]
[[Category:Financial services companies disestablished in 2006]]

Latest revision as of 07:12, 10 May 2020

MotherRock was an energy sector hedge fund, one of the biggest traders of natural gas derivatives in New York, with assets of around $430 million at one point.[1] It closed in August 2006 due losing money on its bets that natural gas prices would fall.[2] In 2006 the summer heat led to prices increasing and in June 2006 MotherRock Energy Fund lost 24.6 percent and then in July 25.5 percent.[2] Leveraged positions exacerbated the situation and eventually led to a loss of around $230 million in June and July 2006.[3]

History[edit]

The fund was started by J. Robert Collins, with Conrad Goerl and ex-NYMEX vice president John D'Agostino in early 2005.[4]

Senate findings[edit]

When investigating sudden price movements in the natural gas markets, and specifically the role Amaranth Advisors played in these movements, it was ascertained that Amaranth's aggressive trading was the only reason for MotherRock's collapse.[5][6]

It was found that Amaranth could distort market prices through large trades.[citation needed] On July 31, 2006, Amaranth's trading caused a 72% jump in the price spread that directly affected MotherRock's positions so badly that the latter could not meet its margin calls. MotherRock folded soon afterwards.

References[edit]

  1. ^ Liz Moyer (2006). "Energy Hedge Fund Bites The Dust". Archived from the original on January 25, 2007. Retrieved 2007-12-19.
  2. ^ a b Morgenson, Gretchen; Anderson, Jenny (19 September 2006). "A Hedge Fund's Loss Rattles Nerves". New York Times. No. Business Day. New York, N.Y., United States. The New York Times Company. p. C1. Retrieved 8 January 2020.
  3. ^ Staff Reporters (2006). "MotherRock Cries Uncle". Archived from the original on 2008-01-12. Retrieved 2007-12-19.
  4. ^ Alistair Barr (2006). "MotherRock hedge fund shutting down: WSJ". Retrieved 2007-12-19.
  5. ^ "Excessive Speculation in the Natural Gas Market" Archived 2007-07-26 at the Wayback Machine, United States Senate Permanent Subcommittee on Investigations, June 25, 2007
  6. ^ Matthew Leising (2007-06-25). "Amaranth Trading Led to MotherRock Loss, Senate Report Says : Bloomberg".
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