Posts for Ticker ‘vulture’

Mortgage Malaise IPO: Hatteras Financial Corp.

Hatteras Financial Corp., a REIT, or a real estate investment trust, submitted an IPO filing this morning. The proposed maximum aggregate amount in securities is listed as $200 million, although this number is for filing purposes only. The underwriter is listed as Keefe, Bruyette & Woods. Hatteras has applied to trade on the New York Stock Exchange.

Hatteras is externally managed by Atlantic Capital Advisors, LCC, and was formed in September 2007 to invest solely in agency securities, or “adjustable-rate and hybrid adjustable-rate single-family mortgage pass-through securities guaranteed by a U.S. Government agency.” In November 2007, they generated $157.1 million through a private offering and in February generated $158.8 million in a second private offering. The company intends to leverage its capital primarily through short-term borrowings because they believe that it will reduce the impact of changes in the interest rate. They believe that the current situation in the housing market and the low interest rates provide an opportunity to earn a strong return for shareholders. As of December 31, 2007, their portfolio had a weighted average market value of $1.6 billion.

Hatteras intends to capitalize on the infrastructure, business network, and experience of its manager, Atlantic Capital Advisors. Hatteras and Atlantic’s CEO, Michael R. Hough, is also the CEO of ACM Financial Trust, a private REIT.

Hatteras joins an assortment of what appears to mortgage vultures that are emerging to capitalize on the disarray of the current mortgage markets.  We have been pounding the table on the Annaly Capital Management (NYSE: NLY) spin-off Chimera Corp. (NYSE: CIM) even before they came public as having the right expertise and model for pulling this off.  The Blackstone Group (NYSE: BX) has also made its vulture ventures known.  Octavian recently went vulture too, although this was on an international scope.  Even hedge fund Marathon announced plans to go vulture investing with TCW Group. Recently, MFResidential Investments submitted a fairly similar IPO filing.

Rachel Lopez
February 20, 2008

Posted on: February 20, 2008 – 11:30 am in Financial Stocks, IPOs, REIT, , ,

Another Billion Fund Goes Further Into Distressed Investing

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

Posted on: February 6, 2008 – 12:50 pm in Financial Stocks, Value Investing, , , , , ,