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Metallgesellschaft's hedging debacle: what went wrong and lessons learned

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  • Anand Shetty
  • John Manley

Abstract

This paper reviews various aspects of the energy-derivatives marketing and hedging program of Metallgesellschaft (MG) and its hedging strategy. Specifically, the paper looks at the program's risk exposures, cash flow problems, and the developments that led to the termination of the program by MG's management. The criticisms of the hedging program, the impact of MG's action of abruptly terminating the program, and whether the program involved speculation are discussed. The paper concludes with observations on the lessons learned from MG's hedging debacle.

Suggested Citation

  • Anand Shetty & John Manley, 2019. "Metallgesellschaft's hedging debacle: what went wrong and lessons learned," International Journal of Business Continuity and Risk Management, Inderscience Enterprises Ltd, vol. 9(2), pages 97-116.
    • Handle: RePEc:ids:ijbcrm:v:9:y:2019:i:2:p:97-116
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    Cited by:

    1. James S. Doran & Ehud I. Ronn, 2021. "Hedging Long-Dated Oil Futures and Options Using Short-Dated Securities—Revisiting Metallgesellschaft," JRFM, MDPI, vol. 14(8), pages 1-10, August.

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