Background Amaranth is a multi-strategy hedge fund founded in 2000. Its headquarter is sited in Greenwich, U.S. Amaranth involved heavily in energy trading (natural gas) and this accounted for about half of the fund’s capital. Brian Hunter was one of the fund’s trader and he helped the fund climb to the peak of success but later also contributed to the Amaranth debacle. 2. The Amaranth Debacle 2.1. What happened Majority of the initial energy investments of Amaranth were conservative in nature. The energy desk consistently posted annual returns of around 30% and eventually Hunter was able to make more speculative positions with the use of natural gas futures contracts. The bets on natural gas and hurricanes paid off in 2005 due to the disruption of natural gas production caused by hurricanes. In Figure 1 below, we can see that the hurricane in 2005 helped push the price of natural gas up …show more content…
However, the bet in 2006 led to a great loss because the continually drop of the price of natural gas. In the second week of September 2006, Amaranth's losses already grew to $6 billion. Major storms did not happen in the U.S. by the third week, and therefore Amaranth suffered further losses because the price of natural gas continued to fall. 2.2. What went wrong Amaranth made huge bets on the market moving in one direction, the direction of their leveraged bets. Although the fund’s investors would have significant returns if the trades went as planned, this strategy cannot effectively minimize risk. Also, futures contracts that Amaranth engaged in have higher risk than equities because of the leverage given to futures traders. Amaranth was therefore exposed to high level of risks, which will be discussed in the later section. The Amaranth debacle was mainly due to the insufficient risk management steps taken and the incorrect bets on the
Many of Methanex’s competitors diversify their offerings, including methanol as just one offering in their diverse portfolio of chemical production, which provides them with protection from fluctuations in the pricing of methanol and raw materials needed to produce it. Many general chemical competitors also only enter the methanol production market once pricing reaches comparative levels to that of a barrel of oil, which can cause an oversupply in the market and drive prices down.
One of these factors was the logistical nightmare of redeveloping the infrastructure needed to transport oil to the refinery. As early as 1881, Standard oil operated approximately 3,000 miles of pipelines, eventually owning ninety percent of the nation’s pipelines. Although transcontinental railroads were an available alternative, pipelines were cheaper, reduced handling and storage fees, and were more efficient. The fact that modern oil companies invest hundreds of millions of dollars into speculating for sustainable natural oil deposits implies that such deposits are rare and hard to identify with a passing glance. If the spurts of oil proved to be isolated incidents, the capital invested in building pipelines and reestablishing a monopoly would have been squandered.
Texas oil helped America go from an agriculture nation into the top industrial nation much quicker than anticipated.
Scott Angelle, Former Lieutenant Governor of Louisiana and gubernatorial candidate, gave a powerful speech at the Rally for Economic Survival Event hosted at the Cajun Dome in 2010. His target audience was everyone affected by the oil and gas industry, from the taxi driver to the soccer mom. His message was that he will transform Louisiana back into the energy powerhouse it once was through policies that support the energy industry, which will in turn allow the economy to prosper on both the state and national level. In contrast to the policies instated by the Federal Government, such as the drilling moratorium, which inhibits the growth of the industry.
Oil provided new fuel for transportation and manufacturing, even railroads were able to convert to oil. Oil helped manufacturing plants and farms move to a cheaper source of energy. Another significant factor of oil is that it helped encourage automobile production as well as roads. The production of the Interstate highway led to the movement of people and goods (Champagne, Harpham 13). Rapid industrialization of the Gulf Coast region sparked. By 1929 in Harris County, 27 percent of all manufacturing employees worked in refineries. By 1940 the capacity of the refineries had increased fourfold. The oil and gas industries carried a boom-and-bust mentality (Oliena 1). The economy flourish at times and failed other times, because the prices would rise and fall. When new oil was discovered in a particular place it brought about more people, overcrowding the schools and new housing. Yet a couple years later the town could experience a bust creating poverty and making the town a ghost town. The oil and gas industry transformed the government and its role with the economy. The Texas Railroad Commission was extended to regulate energy and to promote well-spacing rules. Higher education benefitted through the oil and gas industry ( Munch, Francis, and Rundell 604). In 1923 oil was discovered in the West Texas Permian Basin on university land. The Permanent University Fund was split up between the
Amaranth is an ancient super plant, native of Peru, and has been cultivated as a grain for thousands of years. Amaranth was a staple food of the Aztecs, and was used as an integral part of Aztec religious ceremonies. The cultivation of amaranth was banned by the Spanish conquistadors upon their conquest of the Aztec nation, crops were burned and its use forbidden.
Instead of putting money back into reinvest in Galveston “they focused their attention on Houston after the discovery of oil in Beaumont in 1901and the dredging of the Houston ship channel in 1909” (Murnane). Galveston never really came back to full after the hurricane because the “oil was discovered in Houston soon afterwards, … Texas’ economic momentum shifted, and Galveston became a beach town.”
In 1982, the federal government put the billions of dollars in some research institutions of this field. During the 1980s, Federal government passed energy act, which provides tax incentives or other preferential policies for the energy industry. In 1986, with several private gas companies, the energy department of United States successfully built the first air drilling technology shale gas horizontal well. In the 80s and 90s, the federal government act further by 29th of unconventional gas tax incentives to encourage...
William Sharpe, Gordon J. Alexander, Jeffrey W Bailey. Investments. Prentice Hall; 6 edition, October 20, 1998
In every industry, there are a lot risks that cause many uncertainties regarding the financial security of different corporations; risks in the short run and in the long run. For that reason, large corporations often allocate a large amount of capital into competent risk managers who are tasked to identify the different risks faced by the company, and to develop efficient risk managing or hedging techniques to handle them.
This is a publicly traded company in the US that has been ding quite well in the recent years. The company’s 10k filing for the year 2014. From this statement, the risks facing the company will be identified classified and suggestions made on how best to mitigate them in the subsequent areas. There are various areas that the risks can arise based on the company’s 10k filling (Mertz, 1999).
It was able to help out when oil prices went up in 1973 and again in
Chickpea (Cicer arietinum Linn.) is a deep rooted crop which belonging to the family Fabaceae. Chickpea is known to be the first domesticated grain legume crop of the Old World (Van der Maesen, 1972). India is the major producer of chickpea, contributing for approximately 65% of the annual world production and at the same time major importer of chickpea. The production of chickpea is limited by various biotic and abiotic stresses throughout the world. There are about 50 pathogens associated with chickpea (Nene, 1980), which include 35 fungi, 9 viruses and 2 bacteria and 4 nematodes. Among the most important biotic stresses that limit chickpea production worldwide, Ascochyta blight is considered to be the most notorious one that hampered the overall yield of the crop (Nene, 1982; Chongo et al., 2000).
... stock fluctuations. If a financial advisor cannot be afforded, it would have been in the best interest of the investor to read more on the stock market news regarding what stocks were predicted to have a profitable growth. The investor could have stayed with energy and renewables, just cold have chosen different corporations then the ones chosen.
Plant nutrition is area of plant biology that is of the utmost importance for the proliferation of plants. Without proper nutrition, plants would simply cease to exist unless drastic alterations were made. There are certain elements that are required for the plant to grow and reproduce; these elements are known as essential elements. There are three requirements of an essential element: the element must be required for the completion of the plant’s life cycle, the element must not be replaceable by another element in whole, and finally the element must be direction involved in the metabolism of the plant. Chemical compounds that are involved in proper nutrition have been designated as nutrients, and further classified as macronutrients and micronutrients. Macronutrients are needed for growth, metabolism, and many other functions, but are designated as “macro” because they are required in larger amounts. Macronutrients include carbohydrates, proteins, and fat molecules. Micronutrients have a much wider function that depends on the exact micronutrient. Micronutrients are designated as so because they are needed in much smaller amounts when compared to macronutrients. Examples of micronutrients include vitamins and minerals.