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What Me Worry?Hedge Fund Managers Like Distre$$ed Assets But Have No Idea What They Are Doing

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Here’s something you probably won’t hear from the girl in investor relations.
Many hedge fund managers are looking to invest in distressed debt tied to energy, housing, automotive, and construction sectors. Because, you know, they’re smarter than everyone else and know that distress equals value opportunity. Also, those guys at Fortress bought all that junk from Bear Stearns and they're really smart over there. Unfortunately, the majority of the managers who plan on investing in troubled companies in the next 12 months say they are "unaware of [their] legal rights in an insolvency situation," according to a study by Lipper HedgeWorld & Schwartz Cooper.
As Reuter’s Jonathan Keehner ever so gently puts it: “That's a concern because debt and equity markets have become relatively illiquid -- meaning there is greater chance that investors who acquire stakes in troubled companies will be unable to find other buyers if things worsen and may instead be forced to defend their interests in bankruptcy court.”
Hedge funds conflicted on distressed assets - study [Reuters]


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