Sunday, January 11, 2009

Steel Partners in Need of Serious Rust Removal

Steel Partners, the fund of activist investor and up-to-now wunderkind manager Warren Lichtenstein, has fallen for some tough times. In what could turn out to be the next paradigm in the HF world, reports, Steel plans on converting its biggest hedge fund into a publicly traded holding company, in a move to stem redemptions as investors would likely only be able to sell their shares in the market, likely at a substantial discount, however gaining some incremental liquidity. FT notes that the fund was down 39% in 2008, and suspended redemptions in December after receiving redemption requests for 38% of assets. It is likely that more funds will follow this example to allow unhappy investors to exit without necessarily liquidating outright.

One can only harken back to the days of 2007 when there was so much money flying around that people would come up with crazy things like SPACs to provide special purpose investing vehicles to fatcats who could only buy so many shares of Sears Holdings at $150/share. Guess now it's time for the opposite... Things would be so much simpler if people could just say enough is enough, and follow Andrew Lahde's example graciously out of the industry. Seems like "Greed is good" is alive and well.
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