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Hedge fund shrinks capital
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September 22, 1997: 6:20 a.m. ET
Long Term to return almost half of $6 billion to investors
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NEW YORK (CNNfn) - In an effort to boost returns, trading house Long Term Capital Management is reportedly returning approximately $3 billion of its $6 billion in capital to investors.
According to The Wall Street Journal, John Meriwether, the fund's manager, sent a letter to investors last week telling them an excess of capital was behind the decision.
The announcement comes as profitable opportunities are shrinking in the international bond markets in which Long Term invests.
Meriwether would not elaborate on his decision to downsize, although hedge-fund experts say the move follows similar decisions by other top-name fund managers including George Soros, Paul Tudor Jones and Bruce Kovner.
The money will be paid out Jan. 2. All funds invested after Dec. 31, 1994, will be returned as well as all profits received by investors who came in before that date.
The only investors not affected by the move will be "strategic investors," or a select few quasi-governmental banks that include the Bank of China. The banks, which each invested $100 million, will receive only 1996 and 1997 profits. The firm's current partners will not take any distribution.
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