Soros Fund Management LLC Has Large Exposure to Lehman Brothers
Just like when Bear Stearns plunged earlier in the year, Lehman Brothers is plunging and stinging many of the hedge funds that made large investments in it.
Funds such as Wellington Management Co. and Janus Capital Group have large positions in Lehman Brothers that were purchased in the second quarter. Another major fund that has exposure to the Lehman Brothers debacle is Soros Fund Management LLC, which is the huge hedge fund ($20 billion under management) that is run by George Soros.
Public records show that Soros Fund Management LLC purchased 9.47 million shares of Lehman Brothers during the second quarter. What is not known is the actual cost basis of their position - the only information that we have is that Soros Fund Management LLC purchased the block of shares between March 31 and June 30th. As you can see, if you look at a chart, is that Lehman Brothers had quite a wide trading band during Q2, meaning that the fund's losses could range from bad to extremely bad, depending on what their average price in the position is.
Their loss is at a bare minimum of $120 million dollars, assuming that they bought in at the absolute low during Q2 (unlikely). On the opposite end of the spectrum, their loss could be as high as $380 million dollars. Or maybe they had the foresight to dump their position sometime in the third quarter, but I kind of doubt that.
Soros Fund Management losses will be steep, but not nearly as steep as some of the other companies that invested heavily in Lehman during the second quarter. AllianceBernstein owns a full 9.5% of Lehman Brothers, while Wellington Management owned 3.7% and Janus owned 3.2% of the company as of the end of June.
Did these companies cut their losses or are they going down with the ship?
Lehman Brothers closed at $3.65 on Friday and is frantically trying to find an investor to help keep it afloat. This is well off of its 52 week high of $67.73.
Filed under: Hedge Fund News
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