April 4, 2008 |
Congratulations John and Suzy Taxpayer, you are now the proud owners of Bear Stearns. Yes, this could be you should Bear end up filing for Chapter 11 over the next couple of days. This looks likely as the heroics by JP Morgan and the Federal government has not been able to completely stop the bleeding. For the tax payer, the likely result is losses as the government will not want to carry these assets on the books and will look for the quick fire sale. What does this mean for the hedge funds? A couple of good things: 1) hedge funds will be the likely buyers of these assets at significant discounts and 2) one, if not more of the big boys will be invited to manage and facilitate the sale of the assets.
My money is on The Blackstone Group given the media’s recent attention to their enviable liquidity position and ability to raise $10 billion fairly effortlessly for their latest real estate fund. So as a taxpayer (or burgeoning hedge fund manager) how do you ease the pain and potentially participate in all of this? Pick up a few shares of The Blackstone Group (ticker: BX)* and ride the wave of their liquidity and strategic positioning. Alternatively, play the part of the activist investor: shoot some e-mails to your congressmen, Fed governors, Bear Stearns execs, and other related players and let them know that we are watching and that we want a fair and open market bid (or ongoing asset management process) that yields the best possible return on our investment.bail out, bear stearns, start up hedge funds