Hedge funds' bet on the corpse of Lehman Brothers Holdings is paying off.
The collapsed investment bank's liquidators said yesterday that they'd pay out $17.9 billion more to creditors. The distribution, the fifth since the end of 2011, brings the total returned to creditors to more than $80 billion—$15 billion more than initially expected, amounting to about six extra cents on the dollar.
For the hedge funds that aggressively bought up Lehman claims in the aftermath of its 2008 failure, those six cents are adding up. Paulson & Co. alone had made $1 billion on its Lehman investments through last year, The Wall Street Journal reports.
Others have done well, too: Silver Point Capital invested in bonds issued by Lehman's derivatives business. Those bonds are now expected to recover 30.9% of their value, three cents more than initially expected. Halcyon Asset Management and King Street Capital Management were also major Lehman debt investors.
There could still be more to come. Lehman's bankruptcy liquidation process is expected to take several more years.