The Merrill Lynch Sale At 22 cents/$1....Will End Up Far Less Than 22 cents....

Discussion in 'Wall St. News' started by libertad, Jul 29, 2008.

  1. MER seems pretty desperate for cash despite their previous statement about them not needing a capital raise.

    FWIW, I believe C did the same deal with Blackstone, TPG, and Apollo group. Citigroup sells the debt and provide the financing. That was back in April.
     
    #11     Jul 29, 2008
  2. From my understanding they're buying the highest risk level. There is no guarantee that any money will come in at all. Say if 10% of the total mortgages default, the holders of the safest CDOs recieve their payment first. There is a reason why this stuff is zero bid.
     
    #12     Jul 29, 2008
  3. Yes, it's classic Merrill Lynch. I liken them to vampires after being on the inside of that mess several years ago. I'm not surprised at the least by anything mother merrill pulls these days.
     
    #13     Jul 29, 2008
  4. bgp

    bgp

    this is fraud. these ceo's should be hung w/ the s.e.c.


    bgp:mad:
     
    #14     Jul 29, 2008
  5. jem

    jem

    Being that I no longer daytrade I went back to being a lawyer slash real estate broker. My firm did workouts in the mid 90s.

    My old law partner promised himself he would be a principle the next time around -- I went into trading. I made good money first but he is turning into king now.

    His hedge fund set up a "platform" to buy and then sell debt from developers. He is on his third deal now. His first two had returns in the 70% range. Now he is raising a great deal of money to buy some really big projects from really broke developers for cents on the dollar.

    I talked to him about this and he said lawyers with really large collection operation will not buy this stuff. It is not even worth the 2-7 cents on the dollar you can get it for.

    1. many of the loans are not "collectible" after a foreclosure. (state laws vary widely)
    2. Many of these toxic borrowers had no assets to begin with and had no real earnings or hope of future earnings.
    3. Not only would you have to pay for the loans but you would have to spend money filing lawsuits - perfecting your judgments before dead lines wiped you out.
    4. Even if you do get judgments many will be wiped out by bankruptcy.

    2 cents on the dollar may be to much for junior liens.
     
    #15     Jul 29, 2008
  6. There are a select few all cash (the investment firm uses their own money to buy. No loans involved!) private RIET's I know of out there that are doing very well. Not 70% per year though...

    More like 6% per month minimum, with an average return of 12-17% per year over the 3-5 year term.

    Bieng non-correlated, and all cash is the plus.
     
    #16     Jul 29, 2008