John D. Arnold
Encyclopedia
John Douglas Arnold, born in 1974, is an American
hedge fund
manager, specializing in natural gas
trading. His firm, Centaurus Advisors, LLC, is a Houston-based hedge fund that specializes in trading energy products.
, he began his career as a trader at Enron
. After initially working on the Crude Oil desk, Arnold moved over to the Natural Gas Desk upon the departure of Jeff Bussan. Using their new Internet
-based trading network, EnronOnline, he is credited with making three quarters of a billion dollars for Enron in 2001 and was rewarded with an $8 million bonus. One of his former colleagues dubbed him "the king of natural gas."
. His employees include several big name energy traders including ex-Enron CEO Greg Whalley, as well as Bill Perkins, Mike Maggi, and Conrad Goerl, previously of MotherRock
.
According to Arnold, "After Enron collapsed, there was a general revaluation of credit risk
among energy companies. The better credits were less willing to take on the lesser credits as counter parties. So the lesser credits found themselves with fewer counter parties willing to trade with them, even though they still needed to hedge the pricing risks in their business. Hedge funds previously had not been involved in the over-the-counter market, except for the very largest, because the other participants were reluctant to grant credit to that type of entity."
During the collapse of Amaranth Advisors
, Centaurus is widely credited as being one of the major players on the other side of their position, and returning as much as 150% in 2005.
At a recent energy conference, Arnold stated that he looks "to place bets on a market that he determines is ‘biased’ ... [W]e ask ourselves can we identify what is forcing a market to price a product at an unfair value, and then, what will push it back to fair value." Arnold also referred to the speculative trading that was taking place on the unregulated over-the-counter Intercontinental Exchange (ICE) and NYMEX's Clearport Trading: "Trading never went away ... [W]hat has changed is the non-commercial type of interest ... [B]ecause of this there has never been as much investor interest ... as there is today."
During August 2008, Centaurus acquired around 10% of the shares of National Coal Corporation (NCOC).
John D. Arnold recently made a rare public speech to the CFTC (U.S. Commodity Futures Trading Commission
), in which he opposed limits on financially settled trading positions but supported limits in the physical energy futures as they near expiration. As Arnold told the CFTC (in one of the few statements he made that wasn't steeped in trading jargon), "I try to buy things whenever they're trading below what [our] analysis shows to be fair value and sell things whenever our analysis shows that the forward curve is higher than our analysis of fair value."
In Forbes
magazine's 2010 list of The World's Billionaires, John Arnold ranked 212, with a net worth of $4 billion.
In 2009, John Arnold is believed to have made 900 million dollars.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
manager, specializing in natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
trading. His firm, Centaurus Advisors, LLC, is a Houston-based hedge fund that specializes in trading energy products.
Enron
After graduating from Vanderbilt UniversityVanderbilt University
Vanderbilt University is a private research university located in Nashville, Tennessee, United States. Founded in 1873, the university is named for shipping and rail magnate "Commodore" Cornelius Vanderbilt, who provided Vanderbilt its initial $1 million endowment despite having never been to the...
, he began his career as a trader at Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
. After initially working on the Crude Oil desk, Arnold moved over to the Natural Gas Desk upon the departure of Jeff Bussan. Using their new Internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
-based trading network, EnronOnline, he is credited with making three quarters of a billion dollars for Enron in 2001 and was rewarded with an $8 million bonus. One of his former colleagues dubbed him "the king of natural gas."
Centaurus
When Enron collapsed in 2002, he founded Centaurus with his previous year's bonus. His company now has as much as $3 billion in assets under managementAssets under management
Assets under management is a financial term used denote the market value of funds being managed by a financial instutition on behalf of its clients, investors, depositors, etc. This metric is a sign of size and success against competition...
. His employees include several big name energy traders including ex-Enron CEO Greg Whalley, as well as Bill Perkins, Mike Maggi, and Conrad Goerl, previously of MotherRock
MotherRock
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...
.
According to Arnold, "After Enron collapsed, there was a general revaluation of credit risk
Credit risk
Credit risk is an investor's risk of loss arising from a borrower who does not make payments as promised. Such an event is called a default. Other terms for credit risk are default risk and counterparty risk....
among energy companies. The better credits were less willing to take on the lesser credits as counter parties. So the lesser credits found themselves with fewer counter parties willing to trade with them, even though they still needed to hedge the pricing risks in their business. Hedge funds previously had not been involved in the over-the-counter market, except for the very largest, because the other participants were reluctant to grant credit to that type of entity."
During the collapse of Amaranth Advisors
Amaranth Advisors
Amaranth Advisors LLC was an American investment adviser managing multi-strategy hedge fund founded by Nicholas Maounis and headquartered in Greenwich, Connecticut. The firm had up to $9 billion in assets under management and collapsed in September 2006 after losing in excess of $5 billion on...
, Centaurus is widely credited as being one of the major players on the other side of their position, and returning as much as 150% in 2005.
At a recent energy conference, Arnold stated that he looks "to place bets on a market that he determines is ‘biased’ ... [W]e ask ourselves can we identify what is forcing a market to price a product at an unfair value, and then, what will push it back to fair value." Arnold also referred to the speculative trading that was taking place on the unregulated over-the-counter Intercontinental Exchange (ICE) and NYMEX's Clearport Trading: "Trading never went away ... [W]hat has changed is the non-commercial type of interest ... [B]ecause of this there has never been as much investor interest ... as there is today."
During August 2008, Centaurus acquired around 10% of the shares of National Coal Corporation (NCOC).
John D. Arnold recently made a rare public speech to the CFTC (U.S. Commodity Futures Trading Commission
Commodity Futures Trading Commission
The U.S. Commodity Futures Trading Commission is an independent agency of the United States government that regulates futures and option markets....
), in which he opposed limits on financially settled trading positions but supported limits in the physical energy futures as they near expiration. As Arnold told the CFTC (in one of the few statements he made that wasn't steeped in trading jargon), "I try to buy things whenever they're trading below what [our] analysis shows to be fair value and sell things whenever our analysis shows that the forward curve is higher than our analysis of fair value."
In Forbes
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
magazine's 2010 list of The World's Billionaires, John Arnold ranked 212, with a net worth of $4 billion.
In 2009, John Arnold is believed to have made 900 million dollars.