5 replies to this topic

[TTHQ Staff]

Not good news for the market IMO, as stated.
Anyone got any details?

Merrill reportedly seizes $400M from fund

Investment bank to auction assets from a Bear Stearns fund after a negative bet on the subprime market.
June 18 2007: 8:02 AM EDT

NEW YORK (CNNMoney.com) -- Merrill Lynch has seized $400 million of its assets from a troubled hedge fund managed by Bear Stearns, the Wall Street Journal reported in its online edition.

Last week, Bear Stearns' High-Grade Structured Credit Strategies Enhanced Leveraged Fund scrambled to sell-off $4 billion in bonds backed by risky subprime mortgages to raise cash and assets for creditors and avoid liquidation, the Journal reported.

The report said the investment bank Merrill Lynch will auction the seized assets Monday at noon, in a move that could spur other lenders to seize funds.

[jawndissedi]

Not good news for the market IMO, as stated.
Anyone got any details?

Merrill reportedly seizes $400M from fund

Investment bank to auction assets from a Bear Stearns fund after a negative bet on the subprime market.
June 18 2007: 8:02 AM EDT

NEW YORK (CNNMoney.com) -- Merrill Lynch has seized $400 million of its assets from a troubled hedge fund managed by Bear Stearns, the Wall Street Journal reported in its online edition.

Last week, Bear Stearns' High-Grade Structured Credit Strategies Enhanced Leveraged Fund scrambled to sell-off $4 billion in bonds backed by risky subprime mortgages to raise cash and assets for creditors and avoid liquidation, the Journal reported.

The report said the investment bank Merrill Lynch will auction the seized assets Monday at noon, in a move that could spur other lenders to seize funds.

A poster over at CalculatedRisk summed it up nicely this weekend when he wrote:

"Merrill Lynch has decided that they want to be 1st out the door and cripple BS (how suiting) in this game of musical chairs. Much like in RE in a crash, the 1st guy to sell loses the least amount of money."

Based on what I see here, it looks as though a rush for the exits is a distinct possibility:

"On Friday, credit-rating firm Moody's Investors Service slashed ratings on 131 bonds backed by pools of speculative subprime loans because of unusually high rates of defaults and delinquencies among the underlying mortgages. The ratings company also said it is reviewing 247 bonds for downgrades, including 111 whose ratings it had just lowered. All the bonds were issued as recently as last year."

[greenie]

Not good news for the market IMO, as stated.
Anyone got any details?

I do not want to post the details, because most bears won't be able to handle it. I am serious..

[swanstkdh]

Not good news for the market IMO, as stated.
Anyone got any details?

I do not want to post the details, because most bears won't be able to handle it. I am serious..

What is that supposed to mean? That this is bullish for the market because the dollar and interest rates will go down?

[jawndissedi]

Not good news for the market IMO, as stated.
Anyone got any details?

I do not want to post the details, because most bears won't be able to handle it. I am serious..

What is that supposed to mean? That this is bullish for the market because the dollar and interest rates will go down?

It's a little more complicated than that; this story will give you some context:

Bloomberg

[greenie]

It's a little more complicated than that; this story will give you some context:

Bloomberg

It is not the same story, but maybe related. Wall street journal says Bear Stearns hedge fund was heavily short subprime ABX bonds, because they were sure things will get worse for those homeowners. However, the ABX indices staged a rally from March to April. This made their 10X leveraged shorts go bust. Although the ABX indices are now back below Feb low, the fund is in trouble from their earlier losses.

I am a bit suspicious of the story though, because some reports are saying the fund stopped redemption in early Feb. We will learn more, when the lawsuit stage is reached.