From the Financial Times’ blog Alphaville:
Investors in the worse-hit of two stricken Bear Stearns hedge funds are offering to sell their holdings for as little as 11 cents on the dollar but still finding no buyers, according to unfilled trades on Hedgebay, a secondary market for funds. Vulture funds and others have been quick to bid for holdings in the two funds, but the best bid for Bear’s High-Grade Structured Credit Strategies Enhanced Leveraged Fund, the more geared of the two, is just 5 cents on the dollar. Private sales of stakes are the only way investors can exit the two Bear funds, after the suspension of redemptions in May.
To clarify, these bids are for the stakes held by equity investors in the fund. This certainly doesn’t speak well for the likelihood of the investors seeing any of their money again. Buyers of illiquid interests typically make lowball bids (they know they are the only game in town), so I find that the fact that investors are asking for only 11% of their earlier value even more revealing than the offers.