Even the street.com is asking that question this morning. The Lone Star Fund, located in Dallas Texas, is making out like a bandit. They got they're start in the S&L crisis, so they have lots of experience.
This mortagage/banking/credit/oil crisis is MIHOP!
We need whistleblowers from the finacial industry to COME FORWARD!
Bush is wiping out the banks on purpose. Carlyle is lobbying congress to be able to buy bigger shares of banks. Lehman is selling it's investment unit to Blackrock. What is an investment bank without an investment unit? Please brokers come forward before they wipe out the whole country.
Who is Lone star?
http://www.stockpickr.com/problog/817/But what isn’t up to debate is that Lone Star Capital has a history of bucking the trend and proving the naysayers wrong.
Recently, Merrill Lynch (MER) said it was selling a portfolio of collateralized debt obligations, or CDOs, with an original face value of $30.6 billion, to the Dallas-based private equity firm Lone Star Capital for $6.7 billion. But who is Lone Star Capital, and why the heck is it buying this toxic paper?
Lone Star, which was founded in 1995 and is led by John Grayken, specializes in investing in distressed assets. Lone Star runs approximately $14 billion dollars in six funds:
1.Lone Star Fund V: Targets financial and real estate assets on a global basis, focusing on investments in secured and corporate unsecured debt, portfolios of distressed real estate and financially-oriented operating companies.
2.Lone Star Fund IV : Approximately 76% of the capital in Lone Star Fund IV was invested in Japan and South Korea. Germany also emerged as an active region as Lone Star Fund IV acquired the first seven portfolios of nonperforming loans to trade in the marketplace.
3.Lone Star Fund III: Comprised of secured and corporate unsecured loans, corporate acquisitions and leveraged debt financing.
4.Lone Star Fund II: Approximately 75% of the capital of Lone Star Fund II is also invested in Japan and South Korea.
5.Lone Star Opportunity Fund: Acquires assets of sub-performing mortgage debt, origination of high loan-to-value first mortgages and direct ownership of developed real estate.
6. Brazos Fund: Invests in Brazil.
The firm made its name in 1990, during the savings-and-loan crisis, by taking massive positions in companies that faced financial stress, rehabilitating them and then selling them to other investors for huge returns.
One of its first big deals was the purchase of Shoney's. After owning the restaurant for about five years, it sold it off to another investor for a triple-digit return.
In 2001, Lone Star also bought a small nationalized lender from the Japanese government for around $400 million. It sold a third of the bank for $800 million and the rest to a hedge fund for about $2 billion. Another triple-digit return
Recently, it bought CIT Group's (CIT) mortgage business for $1.5 billion. Leon Cooperman, who runs Omega Advisors and is the former chairman and CEO of Goldmans Sachs' (GS) Asset Management division, said with regards to CIT: “Its book value is about $15 a share. We think they can earn $1.50 to $2, and we wouldn't be surprised if the company is sold.”
Lone Star also bought Bear Stearns' residential mortgage business and paid $295 million for Accredited Home Lenders Holding.
Since Accredited Home Lenders Holding, which at one point was the 10th-largest subprime lender, investors would have to figure that Lone Star has a pretty good grasp on the rate of total defaults in the subprime market. This likely means that the actually price that Lone Star paid Merrill is most likely a substantial discount to where these CDOs should be trading.
This is clearly a great time to be a well-capitalized, well-positioned value investor. Even the head of Lone Star, John Grayken, said: "This is as good a distressed environment as we've seen in a long time." The key here is to find the ugliest securities, which investors have given up on, and watch them snap back.
HEADS UP NEW YORK. You're new Gov. Is talking about selling your bridges to private equity. Stop him now before it's too late.