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Larry Hilibrand

Larry Hilibrand

American arbitrage trader and financier
Larry Hilibrand
The basics

Quick Facts

Intro American arbitrage trader and financier
Is Businessperson Hedge fund manager Financier Financial professional Investment banker
From United States of America
Type Business Finance
Gender male
The details

Biography

Larry Hilibrand (born circa 1959) is an American arbitrage trader and financier.

Education

Hilibrand studied mathematics at MIT, Boston, from where he received a Ph.D. degree.

Career

In the early 1990s, Hilibrand worked at Salomon Brothers and was one of the top-paid arbitrage traders. At the time, he was the managing director at the firm, and happened to be the youngest one in such a position in Salomon's history, which earned him the nickname, "teenage" managing director.

In 1993, John Meriwether, the then-head of bond trading at Salomon, founded Long-Term Capital Management (LCTM,) a  hedge fund firm in Greenwich, Connecticut. Shortly after, Hilibrand and his colleague, Victor Haghani left Salomon to join LCTM as its founding partners. Other notables to have joined LCTM were Greg Hawkins, Eric Rosenfeld, and David W. Mullins Jr. The firm's board of directors included Myron Scholes and Robert C. Merton, who shared the 1997 Nobel Memorial Prize in Economic Sciences for a "new method to determine the value of derivatives".

The company was incorporated in Delaware but based in Greenwich, Connecticut and it managed trades in Long-Term Capital Portfolio LP, a partnership registered in the Cayman Islands. The fund's operation was designed to have extremely low overhead; trades were conducted through a partnership with Bear Stearns and client relations were handled by Merrill Lynch.

In late 1993, LCTM approached several "high-net-worth individuals" in an effort to secure start-up capital for Long-Term Capital Management. With the help of Merrill Lynch, LTCM secured hundreds of millions of dollars from business owners, celebrities and even private university endowments. By the day LTCM began trading in February 1994, they had already amassed just over $1.01 billion in capital.

Meriwether's newly created hedge fund firm met with success, making many of the associated academics immensely rich. In the first year, it managed annualized return of over 21% (after fees), 43% in the second year, and 41% in the third year. In 1998, however, it lost $4.6 billion in less than four months following the 1997 Asian financial crisis and 1998 Russian financial crisis. The firm's master hedge fund, Long-Term Capital Portfolio L.P., collapsed in the late 1990s. It eventually had to be bailed out for a $3.6 billion recapitalization under the supervision of the Federal Reserve.

Hilibrand had invested much of his personal wealth in LTCM that when it collapsed, he found himself broke. At is peak with LTCM, Hilibrand's net worth was close to half a billion dollars. Since the LTCM failure, Hilibrand has flown under the radar.

In 1998, Meriwether founded another hedge fund, JWM Partners LLC., which was joined by his old faithfuls –– Hilibrand, Victor Haghani, and Eric Rosenfeld, among others. With the credit crisis of 2008, JWM Partners was hit with a 44% loss from September 2007 to February 2009 in its Relative Value Opportunity II fund. Consequently, JWM was shut down in July 2009.

Personal life

Hilibrand is known to be press-shy. He shuns interviews and refused to have his photograph taken when he was a working at Salomon. Friends describe him as a political libertarian and say he is obsessed with his privacy.

Hilibrand currently lives in Greenwich with his wife and children.

 

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References
https://www.richmondfed.org/-/media/richmondfedorg/publications/research/econ_focus/2009/summer/pdf/economic_history.pdf
https://web.archive.org/web/20191207194130/https://harvardmagazine.com/2001/01/risk-without-reward.html
https://web.archive.org/web/20191207200115/https://en.wikipedia.org/wiki/Long-Term_Capital_Management
https://web.archive.org/web/20191207200504/https://www.nytimes.com/1998/10/11/business/long-term-capital-a-case-of-markets-over-minds.html
https://web.archive.org/web/20180330201412/http://greenwichfreepress.com/around-town/giving/abilis-announces-annual-meeting-with-special-guests-debbie-larry-hilibrand-104282/
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