One person's pain is another's gain. So it should come as no surprise that commodities traders can thank Amaranth Advisors in the coming bonus round.
"A couple of institutions have been on the favorable end off the Amaranth affair," says Jakob Bloch, managing director of search firm Commodity Appointments. "The good thing that Amaranth brought to the table was a lot of price movement, and that was beneficial to the whole trading community."
In September, Amaranth imploded after losing $6 billion on natural gas trades. But thanks to the fund, commodities traders at Merrill Lynch and JPMorgan should have cause to celebrate this December. When both banks announced their third quarter results recently, they revealed big increases in commodities revenues after betting on Amaranth's right side.
Michael Cavanagh, JPMorgan's chief financial officer, reportedly described Amaranth as "a positive contributor" to the bank's commodities trading results in the third quarter. And Merrill Lynch CFO Jeffrey Edwards highlighted natural gas bets as a contributor to surging commodities revenues, which were double their previous record.
Banks' traders aren't the only beneficiaries of the Amaranth's woes. Bloomberg says the London-based BP Capital Energy Commodity Fund has gained 120 percent this year after correctly anticipating movements in oil and natural gas prices.