Sadly, we know who the big losers are in the Bear Stearns meltdown. Now the names of the winners who banked large as the firm’s stock crumbled are starting to emerge. So far, the usual suspects — Paulson & Co, Harbinger, Greenlight — are among them. No doubt the SEC will be looking at the list in their probe into the trading of the stock and the options as the shit was hitting the fan…..
Large hedge funds — including Harbinger
Capital Partners, Greenlight Capital, Tremblant Capital Group and Paulson &
Co. — made millions of dollars as Bear Stearns’s shares tumbled and various
bearish positions rose in value, according to securities filings and people
close to the firms.
Harbinger Capital, the $19 billion
hedge-fund firm run by Philip Falcone, a former head of high-yield trading at
Barclays Capital, had a short position on Bear from the summer of 2007 until
Monday, according to a person familiar with the matter. The stock fell to $5
from $150 in that time period. In a short position, an investor borrows shares
and sells them, hoping to replace them at a later date at a lower price,
pocketing the difference in the shares as profit.
Mr. Falcone, like John Paulson of Paulson
& Co., is a prime-brokerage client of Bear’s who remained a customer
throughout the securities firm’s tailspin. Harbinger didn’t trade in Bear
Stearns’s options, the person said. Mr. Paulson’s investments have been broader,
and not targeting Bear Stearns; it is unclear whether he holds Bear options…..
Some analysts who follow the moves of short
sellers, or those who bet against stocks, say a big spike in short positions in
recent months suggests that some investors might have been privy to information
about the brokerage firm’s growing difficulties, or acted more quickly to wager
against Bear Stearns compared with other financial companies. The Securities and
Exchange Commission is investigating a spike in options contracts before the
collapse in Bear stock.
Some Traders Win Big – Wall Street Journal
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Tags: Bear Stearns, Greenlight Capital, Harbinger, Paulson & Co