Bear Stearns Warns Hedge Fund Investors of Total Loss
July 18th, 2007Via: Bloomberg:
Bear Stearns Cos. told investors in one of its hedge funds that they won’t get any money back after creditors forced it to sell assets at depressed prices, according to a letter sent by the firm.
While a second fund still contains “sufficient assets” to cover the $1.4 billion it owes the New York-based firm, there’s “very little value left for the investors,” Bear Stearns said in the two-page letter, a copy of which was obtained by Bloomberg News from a person involved in the matter. Bear Stearns bailed out that fund last month with $1.6 billion in emergency funding.
…
The fund that now has nothing left for investors, the High- Grade Structured Credit Strategies Enhanced Leverage Fund, had $638 million of capital as of March 31, according to performance reports sent to clients at the time. The second fund, called the High-Grade Structured Credit Strategies Fund, had $925 million.
Both funds made leveraged bets in an effort to boost returns. The enhanced fund borrowed about $11 billion, or almost 20 times its capital. Its sister fund, the one Bear Stearns bailed out last month, borrowed almost $9 billion.
“There’s going to be more risk aversion,” the article says. What a hoot. Losing more money (and at the risk of being ignorant) what sounds like the total GDP of a country somewhere in this world, Bear Stearns should shut their doors and start digging their graves, or finding an undisclosed location to hide in.
My comment is not as usual, full of sarcasm. My parents worked all of their lives full time and saved and invested and didn’t have any U.S. government support until their retirement (Depression raised born 1910 and 1917). I used to feel neglected as a child because it seemed I was the only one with a working mother (late 50’s early 60’s), and blamed my parents for all of my psychological adjustment problems. Now my mother is cared for at home with her own money, savings, and investment income and I bless her for being so damned smart. While my Mom isn’t exactly an
Elaine Brown she was so totally against taxation. Now its all in my hands and I’m freaking afraid. Four people depend on her income from her investments as their income: and my goddess I bless each and every one them for their help. Given our circumstances now, so help me, I think if I had received a letter such as this from Bear Stearns I’d be traveling to the big city loaded for bear, oh I mean bull hunting. Yup, I’d be real mad.
Does anyone besides me think that the folding of this fund isn’t a crime? I know, yada yada yada, read the fine print before you make an investment decision.
I suspect this is an asset consolidation scam, ala 1929 and Enron.
Hedge funds were designed for people who could afford to lose the money, lots of money. Folks with less means were either suckered or wanted to play in the big leagues and now they are screwed.
The crime is that our society glorifies irresponsible behavior as necessary for success and happiness.
You get better odds with your money in Vegas at a craps table than in any hedge fund.
“Hedge funds were designed for people who could afford to lose the money, lots of money.”
And being deposited in Banks, makes Banks also privy /complicit to the fraud, which has people lose their money, which is not what a hedge fund tells you is their real purpose, is it.
“Investing in this hedge fund will lose you your wealth is drenched in snake oil which counters their glowing performance figures and predictions with a pathetic “all speculative funds carry a certain amount of risk””
In actual fact, the money is never lost except to those who put it in for it simply still with the Banks and their Systems.. but with the hedge funds saying that it has been lost or whatever so that the System can retain it for another of its Scams.