The DJIA was all over the board today. The news du jour continues to be the Bear Stearns hedge funds that are taking hits with some exotic and complex debt strategies that contain subprime mortgages. According to a recent Bear Stearns balance sheet, BSC has approx $12.1 billion of stockholder equity, and today the report was that Bear was putting $3.5billion of their own capital into one of the ailing funds. That's a big chunk of shareholder equity going into one fund. The market can turn toxic very quickly when things get bad, but it also creates opportunities for others, and maybe BSC didn't want to give away assets that they think are worth more than they appear according to today's discounted market price. I've heard talking heads say the toxic hedge funds hold paper worth anywhere from 10 cents to 50 cents on the dollar. Of course, something might be worth 10 cents today, only to be priced at 20 cents tomorrow.
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