Wednesday, July 18, 2007

Bear Stearns hedge funds worthless

The Telegraph reports: “Two struggling Bear Stearns hedge funds that ran into difficulties after making large bets on the troubled US sub-prime mortgage market now contain ‘very little’ or ‘effectively no value’ for investors, according to the Wall Street firm.”

“In a letter to clients, Bear Stearns, which had to pump $1.6bn (£800m) into the funds last month to stop them collapsing, said that it was seeking ‘an orderly wind-down of the funds over time’.”

“In what it described as ‘a difficult development for investors’, the bank said ‘there is effectively no value left’ for investors in its Enhanced Leverage Fund and ‘very little value left’ for investors in its High-Grade Fund.” read more >>

Letter sent to investors: Dear Client of Bear, Stearns & Co. Inc, ... read letter >>

Bear Stearns shifted the blame from subprime mortgage to “unprecedented declines in the valuations of highly-rated securities.” The two funds have been in the news for weeks after suffering heavy losses. Bear sent the letter to investors yesterday.

1 comment:

Andrew said...

Interesting to see how this turned out!