John Meriwether Back on the Edge?

John Meriwether's Bond Fund Loses 24% on Credit-Market Plunge
By Katherine Burton and Saijel Kishan

March 19 (Bloomberg) -- JWM Partners LLC, the investment firm run by ex-Long-Term Capital Management LP chief John Meriwether lost 24 percent in its $1 billion fixed-income hedge fund this year through March 14, according to two people with knowledge of the matter.

Meriwether's Relative Value Opportunity fund was hurt as bond managers such as Peloton Partners LLP and Carlyle Capital Corp. were forced to sell securities to meet margin calls, said the investors, who asked not to be identified because JWM doesn't publicly disclose returns. The Greenwich, Connecticut-based firm, which is selling holdings to reduce borrowings and lower risk, didn't have any loans called, they said.

``There's been a lot of forced de-leveraging,'' said Benjamin Sarly, head of marketing at Sanno Point Capital Management in New York, a relative-value credit fund.

Meriwether declined to comment.

JWM Partners opened a year after Russia's 1998 default resulted in almost $4 billion of losses for Greenwich, Connecticut-based Long-Term Capital. The Federal Reserve orchestrated a bailout by its 14 lenders.

Relative-value funds try to profit from price changes between related bonds. They rarely make outright bets that a specific bond will rise or fall. Investors in these funds expect to make about 1 percent a month.

To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net; Saijel Kishan in London at skishan@bloomberg.net
Last Updated: March 19, 2008 13:42 EDT