Thursday, July 9, 2009

Meriwether Strikes Again

From the WSJ:
John Meriwether is winding down another hedge-fund firm, though this time his woes aren't shaking the financial system.Mr. Meriwether, best known for the 1998 implosion of his famously aggressive Long-Term Capital Management, has returned money to investors with the firm he started just a year later, JWM Partners LLC, according to people familiar with the matter....

In 1998, Long-Term Capital lost $4 billion and triggered a market crisis after Russia defaulted on its debt. Wall Street firms and regulators organized a bailout of the hedge fund to keep its troubles from spreading. The debacle showcased how a single hedge fund's losses could threaten the global financial system.

Mr. Meriwether re-emerged in 1999 with JWM and over several years earned back a degree of investor trust. But last year, JWM lost hundreds of millions of dollars in its funds, including a 42% drop in the flagship fund's investments. Mr. Meriwether and his deputies capped withdrawals at year-end and scrambled to raise new money....

The Relative Value fund eked out a roughly 1% gain during the first couple of months of 2009 before it suspended trading, a person familiar with the fund said.

Anyone who is familiar with the LTCM debacle should not be surprised in this (investors in JWM included). I will always be thankful to Meriwether for playing a supporting role in the thoroughly enjoyable Liar's Poker and the main character in When Genius Failed.

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