With Bear Stearns safely in JPMorgan Chase’s pocket, and Lehman Brothers on the ropes, investors have been eyeing the weak and making their move. Carlyle Group just formed a new fund to invest in distressed investments, and has had no trouble getting investors to chip in. Somewhat ironically, Carlyle was on the distressed side of things itself when Carlyle Capital went under this year, a victim of anxious creditors.
Not to be outdone, Cerberus Capital Management also announced a new distressed assets fund, and other investment firms have also been making deals.
One distressed asset out there is Wachovia. The superregional bank acquired Golden West, which specialized in adjustable rate mortgages, primarily in California, one of the worst-hit states. The bank has been roiled by the credit crisis. It exited the subprime market, cut several hundred jobs, and ousted its CEO. It will be interesting to see which of the funds dares to touch this hot potato.
It may be that investors will hold off until they see what happens with the Bank of America acquisition of Countrywide Financial. The deal will make Bank of America the biggest mortgage lender in the country, but Countrywide is in some serious trouble. The mortgage giant was heavily wounded by the subprime mortgage crisis, and Bank of America’s agreement to buy the company is a way to protect its existing investment. It had already invested $2 billion in the company when the mortgage crisis hit in 2007.
One thing is for certain — these distressed asset funds have plenty of potential targets to choose from. Whether these buyers are preditors or rescuers is very much in the eye of the target company. Whether they are making wise deals is another story.
Comments
steveo Says:
June 16th, 2008 at 2:38 am
Tack occasion sand from Mexico and move weight for weight trade sand for soil from Alaska cart it to the farm lands of the south from yielding farms tacking produce out out out for 100s of years sinking land from over tacking time erosion quintupling the times life from the ground with out putting back the soil that has been taken from this time back Tack from the sea of sand and send it to Alaska in return pristine soil from the beast land on earth for use in the sun of USA.
steveo Says:
June 16th, 2008 at 3:09 am
Put Iron workers to work They want to work Harder so they can make more money to be paid from iron can be put to work As we all know Iron is big money in the the right tide so how do the Iron workers come up with the answer for this to interest the Company Well we can think back to when Iron was being the main ride for American economy’s best investments making what now rids China’s wealth (screws nuts an nails)(Hardware) And the way in witch consumers buy your goods over others Trade if workers want more money give it to them Just connect with quality in quantity as well it is harder work as you are forced to work in factory conditions but the out come is more effective in the way the money comes in.
Patrice Sarath Says:
June 18th, 2008 at 11:41 am
Why do my posts attract the weirdos, yet Stuart can go on about Edgar Cayce and the oilmen of the apocalypse?
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