Over the weekend, The Wall Street Journal Online published a story saying Goldman Sachs will hire 17 traders from Amaranth Advisors, a hedge fund that gained international notoriety for its collapse in September, losing 70% of its $9.5b in assets. Bloomberg reports some Amaranth traders have already started working at Goldman. The hires include 14 credit specialists in New York and three in Singapore, who will all be led by Gregg Felton, former manager of Amaranth's debt investments. Goldman is seen taking on more risk despite the Amaranth implosion, as its Global Alpha Fund is down nearly 12% y-t-d through November, compared to a 14% gain by the S&P 500 Index. A Goldman spokesman declined to comment on the Amaranth hires and the Alpha Fund. The WSJ said Amaranth's letters to investors acknowledged its credit team as being its most profitable in early 2006.
• Sources: Bloomberg, The Wall Street Journal
• Related commentary: Hedge Fund Replication Strategies: What's Under the Hood?, Goldman's New 'Hedge Fund Clone': A Good Idea?, Amaranth: Tip of the Iceberg, In Bid To Catch Competitors, Morgan Stanley Will Buy 20% of Avenue Capital, JP Morgan's Hedge Fund Business Flying High
• Potentially impacted stocks and ETFs: Goldman Sachs (GS). Competitors: Morgan Stanley (MS), Bear Sterns (BSC), Lehman Bros. (LEH) and Merrill Lynch (MER). ETFs: iShares Dow Jones US Broker-Dealers (IAI), streetTRACKS KBW Capital Markets (KCE), Financial Select Sector SPDR (XLF)
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