instead of being funded with Enron stock, this Raptor held warrants in New Power—the very investment that it was supposed to hedge. This meant that if the price of New Power fell, Porcupine’s obligation to Enron would grow at the same time that its ability to pay on the hedge was dropping. Thus, “this extraordinarily fragile structure” (as the special board report later described it) was “the derivatives equivalent of doubling down on a bet.” Porcupine could survive only if New Power shares, which were about to go public, climbed in the aftermarket.
