Galleon and relative value

The New York Times writes: "One bad trade, in the shares of the chip maker Advanced Micro Devices, cost his hedge fund, the Galleon Group, $30 million. That loss more than wiped out the profits that prosecutors claim Mr. Rajaratnam and his accomplices reaped with their scheme."  I wonder if this is true.  The loss was mostly due to a decline in shares overall (in the late 2008 meltdown).  If AMD lost less than the market decline and if the fund had puts or similar to hedge out broader market moves, then couldn't they still have made money off the relative value difference?  I don't know whether those trades can work but I thought there were ways to be macro market neutral and still take advantage of price moves.