The tainted hedge fund doyen is hoping it might just be third
time lucky with his new venture, JM Advisors. Unlike his two
previous hedge fund management firms – LTCM and JWM Partners -
the new firm will not follow relative value arbitrage, which
uses masses of debt to make huge financial gains by pinpointing
small anomalies in the fixed-income markets.
In the 1990s LTCM, set up along with Nobel Prize-winning
economist Myron Scholes, was the darling of the financial world.
But when the Russian crisis hit in 1998, it lost $4.6bn and was
bailed out from the Federal Reserve and finally wound up in
2000.
Immediately after LTCM, Mr Meriwether launched JWM Partners. A
fund that continued many of LTCM's strategies. He convinced
investors to back him again by promising them he was going to
use less leverage.
However, in the aftermath of the 2007 credit crisis JWM suffered a 44pc loss in one of its fund. JWM Hedge Fund was shut down in July 2009.
The new venture, JM Advisors, will have two funds, according to US securities filings. One will target offshore investors and the other US investors. Both follow a global macro hedge fund strategy, which trades in currencies, government bonds and other financial instruments on the basis of global economic trends.
The decision marks a stark departure for Mr Meriwether usual strategies.
