its gonna be bloody in the morning The Wall Street Journal reports BSC already forced to shut two hedge funds that bet heavily on the risky subprime-mortgage market, is now facing big losses in a third fund that has roughly $900 mln in mortgage investments, according to people familiar with the matter. The fund, known as the Bear Stearns Asset-Backed Securities Fund, ran into trouble in July and has refused to return investors' money for the moment, according to these people. One of these people said the redemption requests were postponed in hopes that the fund's assets would rebound in value. The fund contains a range of mortgages, but only a small slice of them that are considered subprime, the area that has given so many firms heartburn in recent weeks. Unlike the two other Bear funds that are being closed, this fund is not leveraged. The asset-backed fund was up about 5% between the beginning of the year and the end of June according to these people. But faced with a slew of mortgage markdowns in July, its performance appears to have plummeted. It is not known how much, if anything, BSCns of the fund... The decline of the asset-backed fund is yet another setback for Bear's embattled money-management unit, Bear Stearns Asset Management. The weakening and eventual failure of two structured credit funds in June and July, known as the High-Grade Structured Credit Strategies Fund and the High-Grade Structured Credit Strategies Enhanced Leverage Fund, lost investors as much as $1.6 billion in equity and forced the ouster of the unit's chairman. "There are no plans to shut down the fund," said Russell Sherman, a Bear spokesman. "We believe the fund portfolio is well positioned to wait out the market uncertainty. And we believe by suspending redemptions, we can ensure the best long term results for our investors. We don't believe it's prudent or in the interest of our investors to sell assets in this current market environment." 18:47 BSC Bear Stearns has halted redemptions on a third hedge fund - Bloomberg -Update-
So BSC is saying, "sorry! We know what's best for you." I know it's in the convenant they can do this, but the lawyers are burnin' the midnight oil tonight. Who in hell would put their money with these morons????
What the hell is he going to restructure? They've got no reputations, assets are all shreds, by the time they get around to anything, any talent will be in the elevator. There are smoking guns all over the place. I don't think they can pull it off. We've been beating this topic up for a couple of weeks; many said it was nothing. I think we've only begun to find the bodies.
This is the key point I think The fund contains a range of mortgages, but only a small slice of them that are considered subprime, the area that has given so many firms heartburn in recent weeks. >> so where are the losses coming from? Prime? If so short the credit card companies I would think.....
Australia's Macquarie funds face losses Tue Jul 31, 2007 6:55PM EDT SYDNEY, Aug 1 (Reuters) - Australia's Macquarie Bank (MBL.AX: Quote, Profile, Research) has warned that retail investors face losses of up to 25 percent in two of its high-yielding investment funds as part of the fall-out from the U.S. subprime mortgage crisis. Macquarie said in a statement released to the Australian Stock Exchange that the Fortress funds -- which have no direct exposure to U.S. subprime mortgages -- could lose a quarter of their value. Local media estimated the losses at more than A$300 million ($254 million). The Australian newspaper said the funds, which are invested in senior secured loans, had combined assets of about A$220 million, but had borrowed borrowed six to seven times their value, magnifying potential losses. Macquarie Fortress Investments director Peter Lucas also warned the funds faced possible margin calls from their lenders if they could not sell enough assets to reduce leverage, the newspaper said. Macquarie said the funds' investment manager had no major concerns about the overall credit quality of the funds, but the portfolio had been affected by price volatility in U.S. markets in the wake of the sub-prime mortgage crisis.
the news is not going away as many on wallstreet hoped. Plus this news is not a external event like a terrrorist strike that the market can shakeoff and rally. this type of news has real world consequences in terms of liquidity and credit, a world wide recession is inevitable.
the funds are just a indication of how much destruction in wealth is occuring. That has real world implications.
Just wondering... How much to BSC employees get paid to lose their clients' money? Do customers pay extra to allow their money to be held hostage? Now that's a good business strategy.