Long-Term Capital Management

(redirected from Long-Term Capital Management LP)

Long-Term Capital Management

A defunct hedge fund, established in 1993, that, at its height, held positions worth more than $1 trillion. Its investment strategy was to take advantage of arbitrage opportunities in bonds and other fixed-income securities; profits on individual transactions were small, so LTCM was required to borrow massive amounts of money in order to operate. It was at first enormously successful, with a 40% annualized return after fees. However, when Russia defaulted on its government bonds in 1998, there was a steep drop in bond prices, endangering LTCM's positions because of its high leverage. Because LTCM controlled upwards of 5% of the bond market at the time, defaulting on its loans would have caused global financial panic. It was eventually bailed out by a consortium of organizations under the supervision of the Federal Reserve.
References in periodicals archive ?
and Long-Term Capital Management LP - the hedge fund that nearly collapsed last year.
25 /PRNewswire/ -- Following the announced recapitalization plan for Long-Term Capital Management LP (LTCM), Fitch IBCA has reviewed the underlying exposures to LTCM for the major U.
Lawmakers grilled Arthur Levitt, chairman of the Securities and Exchange Commission, in the aftermath of last week's near-collapse of Long-Term Capital Management LP.
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