Picture this: You’re so good at your job that you make your company a billion dollars in a single year. Your boss gives you a nine-figure bonus (yes, that’s $100+ million). You’re basically the Michael Jordan of natural gas trading.
Then you lose $6.6 billion and accidentally destroy one of the world’s biggest hedge funds.
Meet Brian Hunter – the guy who proved that being really, really right can sometimes make you catastrophically wrong.
The Farm Boy Who Conquered Wall Street (Almost)
Hunter wasn’t your typical Wall Street hotshot. This guy grew up on a farm near Calgary, studied physics and math, and was basically the quiet kid who actually paid attention in calculus class. While other traders were doing lines of… energy drinks… Hunter was crunching numbers.
He started at TransCanada (now TC Energy) learning the natural gas game from the ground up. Think of natural gas like the awkward middle child of energy – not as sexy as oil, not as trendy as renewables, but absolutely essential for keeping your house warm and your stove working.
By 2001, Deutsche Bank snatched him up, and Hunter went on an absolute tear. First year: $17 million profit. Second year: $52 million. The guy was basically printing money.
But then came December 2003 – his first major “oopsie.” Natural gas prices zigged when Hunter thought they’d zag, costing the bank $51 million in a week. Hunter blamed the bank’s risk management software, which is like blaming your GPS when you drive into a lake.
Enter Amaranth: Where Dreams Go to Die
Hunter jumped ship to Amaranth Advisors, a Connecticut hedge fund that initially kept him on a tight leash. But success has a way of loosening those leashes, and Hunter’s 20-40% annual returns earned him more freedom than a teenager with their first car.
Then came 2005 and Hurricane Katrina. Hunter had bet big on natural gas prices rising, and Mother Nature delivered with a one-two punch of Katrina and Rita that sent gas prices to the moon. Hunter made Amaranth $1 billion that year. Suddenly, he could do no wrong.
Spoiler alert: He very much could do wrong.
The $6.6 Billion Plot Twist
Drunk on success, Hunter made massive leveraged bets on natural gas for winter 2006. He was so confident that he found creative ways around position limits – think of it as financial parkour, but with derivatives.
The problem? Winter 2006 was unexpectedly warm. While everyone else was enjoying mild weather, Hunter watched billions evaporate faster than his confidence. His positions were so massive he couldn’t exit without moving the entire market.
The final tally? Amaranth lost $6.6 billion – roughly the GDP of a small country – and imploded spectacularly.
The Moral of This Very Expensive Story
Hunter’s downfall wasn’t stupidity – the guy was brilliant. It was hubris mixed with terrible risk management. Being right 99% of the time means nothing if that 1% can wipe you out completely.
The lesson? Even geniuses need guardrails. In investing, as in life, it’s not about being right all the time – it’s about surviving long enough to be right when it matters.
And maybe, just maybe, don’t bet the farm on the weather.