There is much handwringing in certain hedge-fund capitals over the demise of AbbVie’s $54 billion deal to buy an Irish pharma whose only attraction, apparently, was a lower tax bill. Many performance points were lost. But AbbVie’s post-Jack Lew change of heart re: Shire is not the only bloodbath that has hedge funds reeling.
As previously mentioned, a federal judge is annoyingly insisting that the federal government probably has a right to take whatever it wants from Fannie Mae and Freddie Mac, what with the whole $187.5 billion bailout and whatnot. As with AbbVie’s cold feet, certain segments of the I-95 corridor between New Haven and Trenton did not see it coming. And even though the debacle is now well over a month old, casualties are still trickling in. The latest: Marathon Asset Management.
New York hedge-fund firm Marathon Asset Management lost 3.2% in October on its Fannie Mae and Freddie Mac wager, according to an investor letter viewed by the Wall Street Journal. The losses canceled Marathon’s paper gains on the trade.
Hedge Fund Casualties from Fannie, Freddie Multiply [WSJ MoneyBeat blog]