You'll love this article...distressed companies taking the "PIPE"...
quote.bloomberg.com
In the day's principal speech, Jamie O'Brien, the 32-year-old chief investment officer at Promethean Investment Group, a New York hedge fund that invests in distressed companies, said that size alone would not guarantee success.
``Virtually every investment bank has been in our office in the last 12 months asking about our business,'' said O'Brien, whose fund has made more than $430 million in these investments, according to PlacementTracker.com. ``Some will come in successfully, others will get their faces ripped off.''
O'Brien, dressed in khakis and a sweater, taunted the assembled investment bankers, many of them in pinstriped suits and cufflinked shirts. ``Come on in, the water's fine,'' he said.
Promethean was the lead investor in several of the largest PIPE investments in the past year, including loans to Etoys Inc., MicroStrategy Inc. and At Home Inc. The $100 million At Home investment was criticized by Merrill Lynch & Co. analyst Henry Blodget as a ``death spiral'' that hastened the firm's bankruptcy. At Home's stock lost half its value within two weeks of announcing the Promethean investment.
Facing Criticism
Investment banks say criticism of the transactions has made it harder to invest in troubled public companies. ``I think these hedge funds are going to have to take responsibility for that,'' Gormley said during a question and answer session following O'Brien's speech.
``Who's kidding who? We're not financing the Microsofts and the Intels of the world,'' O'Brien shot back. ``There is a price companies will pay for issuing through the private market.'' |
