Saturday, 27 December 2014
Last updated 3 days ago
Sep 13 2013 | 12:31pm ET
Lehman Brothers' collapse five years ago was a nightmare for some hedge funds—which counted the firm among their prime brokers. But it's proven a boon for others.
Over the past year-and-a-half, a number of hedge funds have bought up claims against the Lehman estate from creditors willing to sell them at a discount. And they are now reaping the rewards, with payouts to creditors expected to reach $80 billion, $50 billion of which has already gone out.
Among the hedge funds taking their share are Elliott Management, which was a victim of the collapse as a Lehman prime brokerage client but has since turned a $700 million profit on Lehman claims, and Paulson & Co., which is up more than $1 billion. Elliott bought claims with a face-value in excess of $587 million two years ago; Paulson has bet $4 billion on them. The Wall Street Journal reports.
Other hedge funds getting a piece of what's left of Lehman include Halcyon Asset Management, King Street Capital Management and Solus Alternative Asset Management.
"In the beginning, you didn't know what the distribution schedule is like," Solus' C.J. Lanktree told the Journal. "You're taking a lot more risk" buying or holding a Lehman claim, rather than selling it.
Dec 1 2014 | 10:21am ET
As 2014 winds down, Northern Trust Hedge Fund Services executives took some time to share their outlook on trends facing the industry in 2015. Read more…
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