John Meriwether
Encyclopedia
John William Meriwether (born August 10, 1947 in Chicago
, Illinois
) is an American
hedge fund
executive, seen as a pioneer of fixed income arbitrage
.
and an MBA degree from the University of Chicago Booth School of Business. At the University of Chicago, Meriwether studied alongside Jon Corzine
, who would later become chief executive of Goldman Sachs
, Governor of New Jersey
and then CEO of MF Global
, notable for causing the company to go bankrupt in little over 1 year in November, 2011.
trader at Salomon Brothers
. At Salomon, Meriwether rose to become the head of the domestic fixed income arbitrage
group in the early 1980s and vice-chairman of the company in 1988. In 1991, after Salomon was caught in a Treasury securities
trading scandal perpetrated by a Meriwether subordinate, Paul Mozer
. According to Roger Lowenstein
's biography of Warren Buffett
(at page 378), Mozer reportedly told Meriwether he had submitted a "single false bid" and described his effort to cover it up. Meriwether was "stunned" and inquired, "Is there anything else?" Mozer "lied" and "begged for another chance" according to Lowenstein. Meriwether then "huddled" with Salomon CEO John Gutfreund
and Salomon's general counsel. They all agreed the firm should report it to the Treasury Department but nothing happened for four months as the partners, including Gutfreund, "belabored" issues of who should call whom, what to say, and when. Mozer was left at his desk and submitted another false bid, this time resulting in an SEC investigation, Gutfreund's resignation, Buffett's intervention, and (although Lowenstein does not discuss it in this book) Meriwether's $50,000 civil penalty. Meriwether decided to leave Salomon. Later he started LTCM, leading to Wall Street's next crisis and Roger Lowenstein's next book.
hedge fund
in Greenwich, Connecticut
in 1994. Long-Term Capital Management spectacularly collapsed in 1998. The books When Genius Failed: The Rise and Fall of Long-Term Capital Management
and Inventing Money: The story of Long-Term Capital Management and the legends behind it detail the events leading up to and following Long-Term Capital Management's history.
hedge fund opened with $250 million under management in 1999 and by 2007 had approximately $3 billion. The Financial crisis of 2007-2009 badly battered Meriwether's firm. From September 2007 to February 2009, his main fund lost 44 percent. On July 8, 2009, Meriwether closed the fund. In a Bloomberg
story on the closing of JWM Partners an investment adviser said that, "For many investors, John Meriwether is by now just another hedge-fund manager," and that "LTCM’s infamy was a big story in 1998, but the events of 2008 might finally relegate LTCM and 1998 to footnote status.”
, in 2010. The fund is expected use similar strategies as both LTCM and JWM, namely highly leveraged "relative value arbitrage". However, by March 2011, the JM Advisors Macro Fund had raised only $28.85 million.
horse racing for a number of years and is a member of the Board of Directors
of the New York Racing Association
(NYRA). He is best known for once saying "Bet on a horse that craps just before the race". He notably campaigned Buckhan, winner of the 1993 Washington, D.C. International Stakes.
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
, Illinois
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
) is an American
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
executive, seen as a pioneer of fixed income arbitrage
Fixed income arbitrage
Fixed-income arbitrage is an investment strategy generally associated with hedge funds, which consists of the discovery and exploitation of inefficiencies in the pricing of bonds, i.e...
.
Education
John Meriwether earned an undergraduate degree from Northwestern UniversityNorthwestern University
Northwestern University is a private research university in Evanston and Chicago, Illinois, USA. Northwestern has eleven undergraduate, graduate, and professional schools offering 124 undergraduate degrees and 145 graduate and professional degrees....
and an MBA degree from the University of Chicago Booth School of Business. At the University of Chicago, Meriwether studied alongside Jon Corzine
Jon Corzine
Jon Stevens Corzine is the former CEO of Goldman Sachs and of MF Global, and a one time American politician, who served as the 54th Governor of New Jersey from 2006 to 2010. A Democrat, Corzine served five years of a six-year U.S. Senate term representing New Jersey before being elected Governor...
, who would later become chief executive of Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
, Governor of New Jersey
Governor of New Jersey
The Office of the Governor of New Jersey is the executive branch for the U.S. state of New Jersey. The office of Governor is an elected position, for which elected officials serve four year terms. While individual politicians may serve as many terms as they can be elected to, Governors cannot be...
and then CEO of MF Global
MF Global
MF Global , formerly known as Man Financial, was a major global financial derivatives broker. MF Global provided exchange-traded derivatives, such as futures and options as well as over-the-counter products such as contracts for difference , foreign exchange and spread betting. MF Global was...
, notable for causing the company to go bankrupt in little over 1 year in November, 2011.
Salomon Brothers
After graduation, Meriwether moved to New York City, where he worked as a bondBond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
trader at Salomon Brothers
Salomon Brothers
Salomon Brothers was a bulge bracket, Wall Street investment bank. Founded in 1910 by three brothers along with a clerk named Ben Levy, it remained a partnership until the early 1980s, when it was acquired by the commodity trading firm Phibro Corporation and then became Salomon Inc. Eventually...
. At Salomon, Meriwether rose to become the head of the domestic fixed income arbitrage
Fixed income arbitrage
Fixed-income arbitrage is an investment strategy generally associated with hedge funds, which consists of the discovery and exploitation of inefficiencies in the pricing of bonds, i.e...
group in the early 1980s and vice-chairman of the company in 1988. In 1991, after Salomon was caught in a Treasury securities
Treasury security
A United States Treasury security is government debt issued by the United States Department of the Treasury through the Bureau of the Public Debt. Treasury securities are the debt financing instruments of the United States federal government, and they are often referred to simply as Treasuries...
trading scandal perpetrated by a Meriwether subordinate, Paul Mozer
Paul Mozer
Paul William Mozer is an American former Treasury bond trader for Salomon Brothers who was convicted in an illegal bidding scandal.- Early life and career :...
. According to Roger Lowenstein
Roger Lowenstein
Roger Lowenstein is an American financial journalist and writer. He graduated from Cornell University and reported for the Wall Street Journal for more than a decade, including two years writing its Heard on the Street column, 1989 to 1991. Born in 1955, he is the son of Helen and Louis Lowenstein...
's biography of Warren Buffett
Warren Buffett
Warren Edward Buffett is an American business magnate, investor, and philanthropist. He is widely regarded as one of the most successful investors in the world. Often introduced as "legendary investor, Warren Buffett", he is the primary shareholder, chairman and CEO of Berkshire Hathaway. He is...
(at page 378), Mozer reportedly told Meriwether he had submitted a "single false bid" and described his effort to cover it up. Meriwether was "stunned" and inquired, "Is there anything else?" Mozer "lied" and "begged for another chance" according to Lowenstein. Meriwether then "huddled" with Salomon CEO John Gutfreund
John Gutfreund
John H. Gutfreund is the former CEO of Salomon Brothers Inc, an investment bank that gained notoriety in the 1980s. Gutfreund turned Salomon Brothers from a private partnership into a publicly traded corporation which started a trend in Wall Street for investment companies to go public. He became...
and Salomon's general counsel. They all agreed the firm should report it to the Treasury Department but nothing happened for four months as the partners, including Gutfreund, "belabored" issues of who should call whom, what to say, and when. Mozer was left at his desk and submitted another false bid, this time resulting in an SEC investigation, Gutfreund's resignation, Buffett's intervention, and (although Lowenstein does not discuss it in this book) Meriwether's $50,000 civil penalty. Meriwether decided to leave Salomon. Later he started LTCM, leading to Wall Street's next crisis and Roger Lowenstein's next book.
LTCM
Meriwether founded the Long-Term Capital ManagementLong-Term Capital Management
Long-Term Capital Management L.P. was a speculative hedge fund based in Greenwich, Connecticut that utilized absolute-return trading strategies combined with high leverage...
hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
in Greenwich, Connecticut
Greenwich, Connecticut
Greenwich is a town in Fairfield County, Connecticut, United States. As of the 2010 census, the town had a total population of 61,171. It is home to many hedge funds and other financial service companies. Greenwich is the southernmost and westernmost municipality in Connecticut and is 38+ minutes ...
in 1994. Long-Term Capital Management spectacularly collapsed in 1998. The books When Genius Failed: The Rise and Fall of Long-Term Capital Management
When Genius Failed: The Rise and Fall of Long-Term Capital Management
When Genius Failed: The Rise and Fall of Long-Term Capital Management is a book by Roger Lowenstein published by Random House in 2000. As of 2008, there have been six editions....
and Inventing Money: The story of Long-Term Capital Management and the legends behind it detail the events leading up to and following Long-Term Capital Management's history.
JWM Partners
A year after LTCM's collapse, in 1999, Meriwether founded JWM Partners LLC. The Greenwich, ConnecticutGreenwich, Connecticut
Greenwich is a town in Fairfield County, Connecticut, United States. As of the 2010 census, the town had a total population of 61,171. It is home to many hedge funds and other financial service companies. Greenwich is the southernmost and westernmost municipality in Connecticut and is 38+ minutes ...
hedge fund opened with $250 million under management in 1999 and by 2007 had approximately $3 billion. The Financial crisis of 2007-2009 badly battered Meriwether's firm. From September 2007 to February 2009, his main fund lost 44 percent. On July 8, 2009, Meriwether closed the fund. In a Bloomberg
Bloomberg L.P.
Bloomberg L.P. is an American privately held financial software, media, and data company. Bloomberg makes up one third of the $16 billion global financial data market with estimated revenue of $6.9 billion. Bloomberg L.P...
story on the closing of JWM Partners an investment adviser said that, "For many investors, John Meriwether is by now just another hedge-fund manager," and that "LTCM’s infamy was a big story in 1998, but the events of 2008 might finally relegate LTCM and 1998 to footnote status.”
JM Advisors
Meriwether opened his third hedge fund venture, named JM Advisors Management, also based in Greenwich, ConnecticutGreenwich, Connecticut
Greenwich is a town in Fairfield County, Connecticut, United States. As of the 2010 census, the town had a total population of 61,171. It is home to many hedge funds and other financial service companies. Greenwich is the southernmost and westernmost municipality in Connecticut and is 38+ minutes ...
, in 2010. The fund is expected use similar strategies as both LTCM and JWM, namely highly leveraged "relative value arbitrage". However, by March 2011, the JM Advisors Macro Fund had raised only $28.85 million.
Thoroughbred Racing
John Meriwether has been an owner of ThoroughbredThoroughbred
The Thoroughbred is a horse breed best known for its use in horse racing. Although the word thoroughbred is sometimes used to refer to any breed of purebred horse, it technically refers only to the Thoroughbred breed...
horse racing for a number of years and is a member of the Board of Directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
of the New York Racing Association
New York Racing Association
The New York Racing Association, Inc. is the not-for-profit corporation that operates the three largest thoroughbred horse-racing tracks in the state of New York. It runs Aqueduct Racetrack in South Ozone Park, Queens, Belmont Park in Elmont, Long Island , and Saratoga Race Course in Saratoga...
(NYRA). He is best known for once saying "Bet on a horse that craps just before the race". He notably campaigned Buckhan, winner of the 1993 Washington, D.C. International Stakes.