Long-Term Capital Management
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| Industry | Investment services |
|---|---|
| Founded | 1994 |
| Founder | John W. Meriwether |
| Defunct | 1998 |
| Headquarters | Greenwich, Connecticut |
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Key people
|
Myron S. Scholes Robert C. Merton John Meriwether |
| Products |
Financial services Investment management |
| LTCM Partners | |
|---|---|
| John W. Meriwether | Former vice chair and head of bond trading at Salomon Brothers; MBA, University of Chicago |
| Robert C. Merton | Leading scholar in finance; Ph.D., Massachusetts Institute of Technology; Professor at Harvard University |
| Myron S. Scholes | Co-author of Black–Scholes model; Ph.D., University of Chicago; Professor at Stanford University |
| David W. Mullins Jr. | Vice chairman of the Federal Reserve; Ph.D. MIT; Professor at Harvard University; was seen as potential successor to Alan Greenspan |
| Eric Rosenfeld | Arbitrage group at Salomon; Ph.D. MIT; former Harvard Business School professor |
| William Krasker | Arbitrage group at Salomon; Ph.D. MIT; former Harvard Business School professor |
| Gregory Hawkins | Arbitrage group at Salomon; Ph.D. MIT; worked on Bill Clinton's campaign for Arkansas state attorney general |
| Larry Hilibrand | Arbitrage group at Salomon; Ph.D. MIT |
| James McEntee | Bond-trader |
| Dick Leahy | Executive at Salomon |
| Victor Haghani | Arbitrage group at Salomon; Masters in Finance, LSE |
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| Myron S. Scholes (left) and Robert C. Merton were principals at LTCM. | |
Long-Term Capital Management L.P. (LTCM) was a hedge fund management firm 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 $3.6 billion recapitalization (bailout) under the supervision of the Federal Reserve.
LTCM was founded in 1994 by John W. Meriwether, the former vice-chairman and head of bond trading at Salomon Brothers. Members of LTCM's board of directors included Myron S. Scholes and Robert C. Merton, who shared the 1997 Nobel Memorial Prize in Economic Sciences for a "new method to determine the value of derivatives". 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 $4.6 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.
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Wikipedia