More Bad News Surfaces on Meriwether Funds

Date: Wednesday, April 30, 2008
Author: The New York Times

Reports continue to surface that hedge-fund manager John Meriwether is letting investors exit his global macro fund after the roughly $300 million portfolio lost 14 percent this year.

Reuters reported Tuesday that the nearly 30 investors in the 5-year-old JWM Global Macro fund, which makes big bets on currencies, stocks and bonds, will have a chance to get their money out immediately after an escape clause was recently triggered.

At JWM Partners, this exit is unusual only in that the fund’s poor performance triggered an provision that allows investors to exit after the fund’s returns drop 20 percent below the previous six months’ so-called high-water mark, or previous greatest value, according to the report.

While it is impossible to say how many people may want to redeem their investments, Reuters estimated that the fund’s value will likely drop below $150 million after investors finish pulling out.

Mr. Meriwether, who is best remembered in the hedge fund industry for having run collapsed hedge fund Long-Term Capital Management, started JWM Partners in 1999 and now manages roughly $1.6 billion in assets.

His other fund, the roughly $1 billion Relative Value Opportunity Fund, is also suffering heavy losses and is now down some 24 percent from January, according to Reuters.

Recently, losses reportedly prompted the firm to trim about 16 people from its payroll, reducing the firm’s size by about 22 percent. The cuts, Reuters said, came in all departments ranging from support staff to portfolio management and were announced internally late last week. And two London-based principals have reportedly announced plans to retire.

Magazine Hedge Fund Manager Week first reported the news the withdrawal option last week.