NEW YORK (CNNfn) - The consortium of Wall Street banks and brokerage firms that rescued ailing hedge fund Long-Term Capital Management in a $3.6 billion bailout in September apparently is beginning to turn things around.
The New York Times reports Wednesday that LTCM, aided by a sharp increase in the global bond markets, earned a small paper profit for the consortium, which includes Merrill Lynch, Goldman Sachs and Morgan Stanley
Despite the signs of life, sources told the Times the fund's portfolio value has grown no more than 1 percent since the 14 banks and brokerage firms invested.
"We are ahead by a nose," an anonymous source to the Times.
Still, sources close to the fund say it's good news for Greenwich, Conn.-based LTCM, and the companies that now own it.
The value of the fund's portfolio plunged in late September and early October, but began to improve late last month, the report said.
So far this month, the fund has earned back all it lost since September, fueled by healthier markets worldwide.
Last month, concern grew among market traders on reports that LTCM had used up more than half of the $3.625 billion capital injection given over by major financial institutions.
Traders worried that LTCM, a private partnership that announced in August it had lost $1.8 billion, would run out of cash before it could turn around its money-losing positions and leave its investors to absorb the losses.
Founded in 1991 by former Salomon Brothers bond guru John Meriwether, LTCM initially specialized in high-volume arbitrage trades between closely linked fixed-income securities. It ran into trouble by spreading into equities and emerging markets when bond yields declined amid low inflation in most developed countries.