Thursday, 28 July 2016
Last updated 6 hours ago
May 21 2012 | 1:39pm ET
Having failed to convince Ally Financial not to put its mortgage business into bankruptcy, Elliott Management is now taking its medicine.
The New York-based hedge fund is likely to take a big hit on the Residential Capital bonds, after the company filed for bankruptcy last week. Elliott also appears to have missed out on a major rally in Ally shares—the hedge fund sold a chunk of its 2.3% stake in the former GMAC Financial over the past several weeks, in time to see someone else profit from the 10% jump in stock price.
That someone else, it appears, is Third Point, which bought Elliott's stake, the New York Post reports.
In March, Elliott urged Ally not to put ResCap into bankruptcy, arguing that such a move would indefinitely delay an initial public offering for the company, which was bailed out by and is now majority-owned by the U.S. government.
ResCap is set to sell the majority of its assets to Fortress Investment Group as part of the bankruptcy proceedings.