The Perils of Forcing a Sale of Illiquid Assets – DealB%k
October 1, 2015 \ 5 Comments
The pension fund estimated it was owed $500 million and Mr. Weinstein had less than two months to refund the money. Mr Weinstein pleaded with the fund to allow him to pay it back in installments over several quarters, arguing that it would be difficult to get top dollar for some of the most illiquid assets – like corporate bonds. FULL ARTICLE
Another article on the liquidity illusion! Hmmm, did any of our readers attend the recent SIFMA Liquidity Forum on Wednesday? NYFRB President Bill Dudley made some interesting comments about liquidity. Interesting? Maybe that was a bad choice of words. Misleading? Superficial? Politically motivated? Here’s what I heard him say. The recent activity in liquidity alerts aren’t supported by the data. Wait, don’t take my word for it, take his. From the WSJ report of the speech, “In prepared remarks before the Securities Industry and Financial Markets Association, a Wall Street trade group, Mr. Dudley said he didn’t think investors’ hypothesis… Read more »
THE ONLY BUYER! Oh boy.
Bottom line, there is a price of immediacy and yes, that price will vary. What thinks you?
If my math is correct they are suing over 2.4% of the portfolio value. I don’t see an egregious miss marking of assets here, it could easily be within the bid / offer for the size of the position. The client knew the fund strategy and holdings, the client had investment professionals (or at least I suspect that is what they held themselves out to be when negotiating their renumeration) and they clearly failed to appreciate the risks of their investment. They should also have realized that liquidity changes with the size of their investment. Time to drop the court… Read more »
Agreed Wolfman. When you want to/HAVE to move something it’s worth what someone will pay for it at that instant, period. I am sure there could be a lot more to the story, but if I have this right, Saba has this distressed position marked where he thought he could sell it tomorrow. Given the nature of the asset and market structure, the ability to determine that can only be described as difficult at best. As Charlie said, time to get a new PM if they thought the outcome was going to be different than it was. The scenario reminds… Read more »
The shady business of Hedge Funds. Who really knows what goes on behind those walls…… The Pension Investment Board of Canada, whomever that is (dopey me) was the LARGEST investor in the Saba Fund. Why? Was there a personal relationship with Boaz or did he and his marketing team just talk themselves into the PIBC’s (easier than writing out again) pants? What did PIBC not understand about the sophisticated strategies (I assume based on his background and his personal background abilities as we were informed of some by the author) and investments that were being made by the fund? So… Read more »
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