Lehman Brothers Financial SA (LEHNQ)

[SwissCheeseAccount]

http://www.ifre.com/how-lehman-was-carved-up-and-hedge-funds-won-big/21355967.fullarticle



It also gave CarVal insight into the complexity of the Lehman operations, and the hedge fund ended up investing more than US$4bn in buying various classes of creditor claims in the US and Europe.

CarVal has not revealed its profit on the trade, but is estimated to have achieved an annual internal rate of return of around 30% across its exposures.


heres where i did the math so feel free to correct me if you find any errors.

https://percentagecalculator.net/

i typed in What is 30% of 4000000000?

the answer: 1200000000

this is just how much Carval made. I truly dont see the point in finding all the numbers for the following hedge funds that invested in lehmans distressed debt such as:

Elliot Associates, King Street Capital Management,l Baupost ,Paulson & Co. Värde Partners, Halcyon Asset Management, Solus Alternative Asset Management

because they all received positive returns as well.


Now lets look at this from a birds eye view. carval was able to invest $4bn (this is

Larger Money

and made $1.2 billion on that investment. Lets look at the CT's . 48mil CT's X $25 face value = $1.2 billion.

with that being said, ONE hedge fund made 1.2 billion back on their investment as opposed to them investing in CT's they would still have been waiting and due to the fact that just someone holds simply 1 share they would receive less than 1.2 billion AND ON TOP OF THAT they would have been ranked way lower in the payout process. So why would a hedge fund go through all that hassle when they can afford a bigger claim and receive a faster payout for more money and less risk and a higher reward.

Fannie has nothing to do with lehman idk why you even brought that up. yes bill ackman invest in them and made it popular im well aware of the situation. warren buffet sold his positions on freddie and fannie saying he saw the paperwork and saw they werent that much of a safe investment. should look that up when you get a chance. also bill ackman tried crushing herbalife and failed miserably and ended up losing money, should look up that as well if you havent already. But he does in fact invest in fannie and he a billionaire and has a hedge fund so he knows everything right? (sarcasm)


back to Lehman. take this as an example:

two people go to universal studios, one person has $50k saved up for vacations compared to the next person who has lets say $1k saved up for vacations. Why would the person with $50k saved up for vacations buy the standard pass and wait 3 hours to get on one ride and not get the front of the line passes with VIP for more money (that they can afford) and only wait 30 minute per ride, enjoy the entire resort and its way less of a hassle. the answer is they wouldn't. why wait hours in line when you have the money to wait minutes?

ehhh