Bear Stearns laying out their coffee spoons

Sadly, a reference to a poem that also contains the lines “In a minute there is time/For decisions and revisions which a minute will reverse.”

Bear Stearns will, by mid-July, have added up the consequences of their cruise through the hamburger stand.

I enjoyed this part:

The process of calculating the funds’ net asset value is taking longer than usual because the securities in which the funds invested are thinly traded and the market for them has been volatile, according to the Journal, which cited a letter to investors from Bear Stearns’ asset-management arm.

No kidding. This time, the rest of us are nearly as interested as the funds’ poor investors (no, not that definition of ‘poor’). Amongst other things the sound of two Bear Stearns funds falling is the first proper sound we’ve yet heard in these woods, and people are interested in getting an idea about what to think of other similarly-exposed funds. But ‘thinly-traded’ and ‘volatile’ is a kindness, I should think. I reckon interested parties include potential investors of the Carlyle Group’s delayed-in-offering-publicly fund Carlyle Capital:

The fund, called Carlyle Capital, will mainly invest in AAA-rated residential mortgage-backed securities, but also in loans, junk bonds and collateralized debt obligations.

One has trouble deciding whether the Carlyle Group got lucky or unlucky with their timing. They’re certainly very active these days. They signed that deal for Allison Transmission (5.6bn, shared with Onex), taking over Manor Care (USD6.3bn), another float of partly-owned Time Share Advertising & Communications (suggesting that their plans to take Allison Transmission public may be good ones indeed – they took a piece of Time Share only last year). They had been interested in the BCE deal, and now seem to be going for Virgin Media (for around USD11bn). I’m not sure I follow the logic that these foreign telco companies are under-valued, relative to their US equivalents. Could the US telcos not in fact be over-valued?

One can at least see where comparisons to sharks come in. The Carlyle Group is clearly afraid to stop swimming. Not every is going for them though – they weren’t able to raise the debt to buy the Coles Group, now going to another Australian company for AUD22bn. The funny thing is, by comparison the Group’s purchases aren’t all that big (they manage USD59bn at the moment).


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