The fates of finance, it seems, do not look kindly upon John W. Meriwether.
Citing unnamed sources, Bloomberg News reported on Thursday that the former Salomon Brothers executive who founded Long-Term Capital Management has reported a 24 percent loss at one of his bond hedge funds for the year through March 14.
JWM Partners‘ Relative Value Opportunity Fund appears to have suffered from the same market turmoil that has shaken up hedge funds and investment banks alike. In this case, Bloomberg reported, JWM had to sell securities to meet margin calls, but didn’t default on any loans.
The timing of the report is rich with resonant irony. Long-Term Capital’s bailout in 1998 is the stuff of legend, as Wall Street’s elite were forced to rescue the fund in order to save themselves from ruin. Long-Term Capital’s sin was its dependence on debt to generate its massive profits, gleaned from bets on bonds, and virtually every major brokerage stood to lose scads of money if it failed. But the only firm that refused to help out was Bear Stearns.
Of course, today it is Bear Stearns that needed a rescue, as its overlevered bets on mortgages threatened to swamp the U.S. financial system.
That may come as cold comfort to Mr. Meriwether however.
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