THE MOTU AREN'T DOING SO WELL

Two of the Masters of the Universe behind the LTCM collapse in the late 90s aren't doing very well again. Why did anyone still trust them?

A Decade Later, John Meriwether Must Scramble Again
LTCM Founder Has Tough Time Stemming Losses at New Funds;
A Withdrawal Deadline Nears
By JENNY STRASBURG
March 27, 2008; Page C1
Wall Street Journal

Ten years after overseeing a hedge-fund collapse that buckled the world's financial markets, John Meriwether again is scrambling to stem losses and keep investors from jumping ship.

Mr. Meriwether is best known as a founder of Long-Term Capital Management, which in 1998 lost $4 billion. That helped foster a global financial crisis and triggered both a Wall Street-led bailout and congressional hearings on the dangers of hedge funds, the freewheeling pools for wealthy investors and institutions that often trade heavily and rely on borrowed money to bolster returns.

Mr. Meriwether's biggest fund, a bond portfolio, has plunged 28% this year; another, broader market fund is down 6%. Both had subpar performances last year.

Platinum Grove Asset Management, the $6 billion hedge-fund firm run by LTCM alumnus Myron Scholes, has lost 13% this month on credit trades, putting it 10% down for the year, according to a person familiar with the fund.