24/7 Wall St. » Chimera

Another Billion Fund Goes Further Into Distressed Investing

247wallst — Wed, 06 Feb 2008 12:50:32 +0000

Octavian Advisors, LP, a global alternative investment management firm managing over $1 Billon in assets, has hired Arif Gangat as Managing Director and Oscar Mockridge as Director to focus on international distressed debt investments. This will be for investing in distressed debt outside of the United States, so it won’t be another distressed debt vulture buying up distressed paper inside the U.S.

CEO Richard Hurowitz believes that Octavian’s unique investing techniques amid the current turmoil in world-wide markets provide a unique opportunity on which these hires can capitalize with their expertise and experience.

Previously, Mr. Gangat directed distressed debt and special situation equity investments at Southpaw Asset Management.
Mr. Mockridge is a former Senior Vice President of the distressed debt and special situations division at Halcyon Asset Management and a former Senior Vice President for the financial restructuring group at Houlihan Lokey Howard & Zukin.

We are seeing more and more interest in funds going out now acting as opportunistic vulture investors. We noted how Annaly and Chimera have a vulture and value approach for investors.

If you read through enough business history and have the power of a few billion dollars here and there, you’ll understand why. In fact, if you have the luxury of taking a very long-term outlook and don’t even watch the market on a short-term basis, you might wonder if short term trends even matter. Take a look at our "anniversary of the crash" article. Times are changing and markets have matured greatly since then, but you can look at the lessons of looking at distressed large companies.

Rachel Lopez
February 6, 2008

Cramer’s Mortgage Winner (NLY, CIM)

247wallst — Thu, 23 Aug 2007 13:57:15 +0000

On today’s STOP TRADING segment on CNBC, Jim Cramer noted how recent news out of the mortgage environment is a help but not necessarily an all-clear sign. He still thinks rate cuts would help, even though some Fed officials are dead wrong because they’d like to actually hike rates. Here was his winning pick in mortgages:

The winner is Annaly Capital (NYSE:NLY) because they just started a company to capitalize off of the mortgage woes last week. We covered this one ourselves last week as we covered Chimera as being the FIRST VULTURE FUND filing out there to take advantage of the disparity and weakness in the mortgage markets to buy assets.

We noted how the Chimera in mythology is a creature made of multiple creatures. "And it’s a mean one." But all jokes aside, we’d expect this Chimera IPO to be one of the fastest IPO’s to make it to market.

Jon C. Ogg
August 23, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

IPO Filing: Chimera, A Vulture Fund With Annaly (CIM, NLY)

247wallst — Fri, 17 Aug 2007 08:56:25 +0000

Annaly Capital Management, Inc. (NYSE:NLY) announced the filing for an IPO of Chimera Investment Corporation under the NYSE tick "CIM." Chimera is a newly-formed specialty finance company that will invest in residential mortgage loans, residential mortgage-backed securities, real estate-related securities and various other asset classes. Does this sound like a vulture fund to you? It should. For filing purposes it lists up to $250 million in common stock that it will sell, although that number could easily change.

Chimera will be externally managed by Fixed Income Discount Advisory Company, or FIDAC, a wholly-owned subsidiary of Annaly, a New York Stock Exchange-listed real estate investment trust. Concurrent with this offering, Annaly will acquire 9.8% of Chimera’s outstanding shares of common stock after giving effect to the shares issued in the offering. Chimera intends to elect and qualify to be taxed as a REIT for federal income tax purposes.

Merrill Lynch & Co. will act as the sole lead manager and book-runner for the proposed offering. Since this is a new company, there are no real financials and there is no real operating history. It says it will focus on higher quality residential mortrgage loans, but it lists that it can look right down into asset-backed securities, commercial mortgage backed securities, and CDO’s. This was filed ahead of the discount rate cut today, but this looks to be the first new public distressed fund filing out there.

They arent calling it a vulture fund, but it is. Chimera in mythology is a creature made up of multiple creatures. And it’s a mean one.

Jon C. Ogg
August 17, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he is the publisher of the 24/7 Wall St. Special Situation Investing Newsletter and does not own securities in the companies he covers.