Amaranth's massive $4 billion bad bet on natural gas prices is creating shock waves in the market for so-called blank-check IPOs.

Amaranth, a hedge fund that once had $9 billion in assets, was one of the biggest investors in initial public offerings by fledgling companies in search of a business plan. The investment banks underwriting blank-check offerings had come to count on Amaranth to take 5% to 10% equity stakes in these speculative stock deals.

But that was before Amaranth's energy trading desk, led by Brian Hunter, gambled badly on natural gas in a calamitous trade that left the fund 35% in the red for the year. Now sources say Amaranth is selling shares in blank-check companies with lightning speed, as the Greenwich, Conn.-based fund tries to stabilize itself and respond to margin calls from its brokers.

A margin call is a demand from a broker that a hedge fund either post more collateral for a stock loan, or immediately pay off the debt that's due. In the wake of last week's bad natural gas trade, Amaranth has been fending off margin call after margin call.

A market source says Amaranth has sold stock in some of the blank-check companies it invested in on Monday and Tuesday. These companies include Acquicor Technology ( AQR), India Globalization Capital ( IGC), Star Maritime ( SEA) and Healthcare Acquisition ( HAQ). An Amaranth spokesman could not be reached for comment.

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