John Meriwether, the hedge fund manager and arbitrageur behind Long-Term Capital Management, is setting up his third hedge fund, according to the FT, with a launch expected in the new year.

Mr Meriwether closed his second fund manager, JWM Partners, about three months ago, after the value of its investments fell by over 44 per cent over the course of the financial crisis, the paper reports.

JWM Partners came into being soon after the collapse in 1998 of Mr Meriwether’s first fund LTCM, which led the US Federal Reserve to take the then unheard-of step of putting together a multi-billion dollar bail-out.

Mr Meriwether’s new venture, JM Advisors Management, will, like both its predecessors, be based in Greenwich, Connecticut.