This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Distressed-Asset Buyers Biding Their Time

The government bought $350 billion worth of bank equity pretty quickly, but its effort to convince others to shell out big bucks for so-called toxic assets might take a lot more time.

In light of the ever-changing bailout proposals, and the lack of agreement on fair pricing for the troubled assets, some distressed-asset investors say they intend to remain on the sidelines, at least for the time being.

"Banks are still at the same place as before: 'At what price do these get purchased?'" says Kjerstin Hatch, a portfolio manager at distressed-debt investor Madison Capital Management. "We're absolutely waiting to see how this is eventually structured, and whether it fits the risk-return profiles. They're difficult assets to value, difficult assets to manage, difficult assets to price."

The dislocation in the distressed-debt markets is steep and its potential solutions can be summed up with the unanswerable riddle of, "What comes first, the chicken or the egg?"

The market dislocation has spawned fantastically profitable opportunities in the debt markets for some. John Jacquemin, founder of the Mooring Intrepid Opportunity Fund, notes that "there is no dearth of distressed debt buyers," and "plenty of hedge fund and distressed debt fund money ready and willing to buy this debt."

However, while banks are being weighed down by bad assets, they refuse to sell them at the fire-sale prices offered. Instead, they've been hoping that Uncle Sam will purchase the debt at higher prices or that the market will eventually rebound.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
C $53.07 0.00%
BAC $15.56 0.00%
GS $197.35 0.00%
JPM $62.84 0.00%
MS $36.75 0.00%

Markets

DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs