LJM Preservation and Growth Fund Losses

LJM Partners, a Chicago-based hedge fund, suffered losses on spiking volatility, a trade that has claimed more than one scalp in the last few trading days. Their mutual fund, known as the LJM Preservation and Growth Fund, collapsed by 82 percent over the last week and was closed to new capital on Wednesday.

The once-$800 million LJM Preservation and Growth Fund lost more than 80 percent in the week ended February 7, according to Morningstar Inc., after a surprise spike in market turbulence swiped investment strategies premised on low volatility.

The fund made extensive use of options, touting its ability “to deliver solid returns while maintaining risk parameters” in its most recent annual report to shareholders, while another document says the fund used techniques to “mitigate losses in extreme market drops.”

The report described the fund’s strategy as aiming to capture “the spread between implied and realized volatility,” a description that lines up with one of the hottest trades in financial markets over the last few years but that has blown up for a number of investors in recent days.

LJM Preservation and Growth Fund had been run by Anthony Caine, a veteran of the 1990s technology boom who later founded LJM, and Anish Parvataneni, a former trader for well-known investor Ken Griffin’s Citadel.

In an environment that has been tough on high-cost fund managers, the LJM fund took in $393 million in new cash from investors in 2017, its best-ever sales since launching in 2013, according to Thomson Reuters’ Lipper unit, despite fees as high as 3.34 percent a year.

Now, the LJM fund is closed to most further investment, according to the filing with the Securities and Exchange Commission.

If you are an investor that lost more than $100,000 in the LJM Preservation and Growth Fund you should consider all legal options. If you wish to discuss your particular situation and the potential for the recovery of your investment losses, or you have information of interest, please contact us for an evaluation of your potential case.