Another John Meriwether Fund Shuts Its Doors

Is John Meriwether still a "genius"?

Or, better yet - was he ever the "genius" that many people made him out to be?

Bloomberg.com is reporting that John Meriwether will shutter the main fund (Relative Value Opportunity II fund) at JWM Partners LLC after a particularly rough stretch.

How rough?

According to the article (link below), the Relative Value Opportunity II fund is down 44% from September 2007 until February of 2009.

The fund, which opened up in 1999, ended up returning an average of 1.46% per year to investors since its inception.

Now, where have you heard the name John Meriwether before?

Does LTCM (Long-Term Capital Management) ring a bell?

If you'll remember, LTCM was the toast of the hedge fund world from 1994 (when it was founded) up until 1998. LTCM was averaging 40% per year in returns (after fees) up until its monumental collapse in 1998. LTCM was founded by John Meriwether.

Up until the collapse of LTCM, Meriwether was regarded as a "genius" who had "cracked the code", so to speak.

The collapse of LTCM was so monumental (and potentially dangerous to the global economy) that the Federal Reserve Bank of New York and a conglomerate of firms (including Goldman Sachs and Merrill Lynch) had to hastily organize a $3.6 billion dollar bailout in order to avoid widescale damage to the financial system.

This was a flameout of epic proportions and a black eye for John Meriwether.

However, he was back in business just a year later when he founded JWM Partners LLC.

Meriwether started the firm with $250 million dollars of capital, and by 2007 had $3 billion dollars under management.

From there, things went downhill, and Meriwether decided to shutter JWM Partners LLC less than two years later.

Will Meriwether try his luck for a third time? Or has he finally had enough?

Source: Bloomberg.com - Meriwether Said to Shut JWM Hedge Fund After Losses

Filed under: Hedge Fund News

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COMMENTS

Comment by MarcY on July 10, 2009 @ 10:58 am

Can you say P-O-N-Z-I scheme? Meriwether may not have been running one by the strictest definition of the word, but the returns were unrealistic, possibly inflated, and in the end, all the investors were shaved. Perhaps it's time to broaden the definition and include misrepresentation on any level.

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