Fed liquidating hedge fund


08-Mar-2016 05:42

based in Greenwich, Connecticut that used absolute-return trading strategies combined with high financial leverage.

The firm's master hedge fund, Long-Term Capital Portfolio L.

P., collapsed in the late 1990s, leading to an agreement on September 23, 1998 among 16 financial institutions — which included Bankers Trust, Barclays, Bear Stearns, Chase Manhattan Bank, Credit Agricole, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, JP Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, Paribas, Salomon Smith Barney, Societe Generale, and UBS — for a .6 billion recapitalization (bailout) under the supervision of the Federal Reserve. Meriwether, the former vice-chairman and head of bond trading at Salomon Brothers.

Members of LTCM's board of directors included Myron S. Merton, who shared the 1997 Nobel Memorial Prize in Economic Sciences for a "new method to determine the value of derivatives".

An external spokesman for the New York-based firm declined to comment. The shuttering underscores continued pressure on the hedge fund industry following a period of poor performance. That was down from .9 billion as of late 2013 and around billion in early 2008, according to firm reporting seen by Reuters.

Industry data tracker HFR reported in September that 530 funds liquidated in the first half of the year, on pace for the second-most shut-downs in a calendar year except for 2008. Co-founder Leff and former co-chief investment officer David Russekoff have departed in recent years.

LTCM managed trades in Long-Term Capital Portfolio LP, a partnership registered in the Cayman Islands.

For his son’s bar mitzvah in 2008, hedge-fund manager Murray Huberfeld chartered a Jet Blue plane and invited hundreds to an oceanfront party in Palm Beach, Fla.

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Initially successful with annualized return of over 21% (after fees) in its first year, 43% in the second year and 41% in the third year, in 1998 it lost .6 billion in less than four months following the 1997 Asian financial crisis and 1998 Russian financial crisis requiring financial intervention by the Federal Reserve, with the fund liquidating and dissolving in early 2000.

Other principals included Eric Rosenfeld, Greg Hawkins, William Krasker, Dick Leahy, James Mc Entee, Robert Shustak, and David W. The company consisted of Long-Term Capital Management (LTCM), a company incorporated in Delaware but based in Greenwich, Connecticut.

Perry, whose firm uses a so-called event-driven strategy focused on profiting from corporate shake-ups, added that a “substantial” amount of client capital would be returned in the beginning of October. Richard Perry launched the firm after working at Goldman Sachs’ risk arbitrage desk that was famous for producing star hedge fund managers.

After producing a gain every calendar year until 2008, Perry has recently lost money on its investments and its assets under management have declined.

Perry Capital, the hedge fund firm founded by Richard Perry and Paul Leff in 1988, plans to wind down its main hedge funds, according to a letter sent to investors on Monday and seen by Reuters.

“Although I continue to believe very strongly in our investments, process and team, the industry and market headwinds against us have been strong, and the timing for success in our positions too unpredictable,” Richard Perry wrote in the letter.