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.
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.
5 billion private bailout of Long-Term Capital Management LP by a group of major banks and brokerage firms.
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