The reckoning of Centaurus billionaire John Arnold

February 01, 2011  

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The Enron trader turned hedge fund billionaire lost money last year. Can his effort to turn Centaurus into a mini-Enron revive his fortunes?

By Leah McGrath Goodman

Illustration by Andrew Clark

It is one minute before the market's close in the final days of John Arnold's first down year. The door is open to Arnold's corner suite in the Houston office of Centaurus Advisors, and the nation's youngest hedge fund billionaire is brooding. Hunched over a desk scattered with papers, he sits motionless, hair tousled, shirt rumpled, no tie. The celebrated energy trader has a lot on his mind: a coal company that's turned into a money pit, his firm's third trading violation in two years, the $725 million sale of a Texas gas hub-and a futile last-ditch attempt to plug a hole in his $5 billion portfolio.

Since Arnold launched Centaurus out of the ashes of Enron in 2002, he has boasted an unheard-of compound annual growth rate of about 125%, prompting many of his...

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