Meriwether hedge fund down 28% in 2008

The largest hedge fund run by John Meriwether has plunged 28%
this year, forcing the co-founder of the defunct Long-Term Capital Management
to scramble again to stem losses and keep investors from fleeing, the Wall
Street Journal said on Thursday.

Losses for the Relative Value Opportunity leveraged bond
fund accelerated this month, after the fund had dropped 9.19 % from Jan 1 to
Feb 28. The broader JWM Global Macro fund, also run by Meriwether’s Greenwich, Connecticut
firm JWM Partners LLC, was down 6% through February, the newspaper said.

Quoting from a March 18 shareholder letter, the newspaper
said Meriwether told investors that losing positions have included mortgage
securities backed by Fannie Mae and Freddie Mac, trades tied to municipal
bonds, and “triple-A” rated commercial mortgage-backed securities.

The former Salomon Brothers executive is trying to assure
investors that his firm will survive tough market conditions and preserve about
$1.4 bln of assets, the newspaper said.

“We have sharply reduced the risk and balance sheet of
the portfolio,” the letter said.

The Relative Value Opportunity fund had $14.90 in borrowed
money for every $1 in equity as of the end of February, the newspaper said.

That’s far below the leverage at Long-Term Capital, whose
1998 implosion led to a rescue by the U.S. Federal Reserve and major investment
banks to avert potential systemic problems in the financial system.

JWM has remained in compliance with its lenders, the
newspaper said, citing a person familiar with the fund.

Meriwether, through a principal at the firm, declined to comment, the
newspaper said.