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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (108668)	3/9/2008 7:34:52 PM
From: Lizzie Tudor	Read Replies (2) \| Respond to of 306849

here's the most important thing to know about Carlyle.... Carlyle Capital's comeuppance: high leverage proves onerous March 7, 2008 PICKING CCC AS YOUR ticker symbol when you are listing a fund that invests in debt seems a little like tempting fate. But that is what private-equity shop Carlyle Group did when it floated Carlyle Capital Corp. in Amsterdam last year. The fund invests in AAA-rated bonds backed by Fannie Mae and Freddie Mac, the U.S. mortgage giants that carry an implicit government guarantee. But with debt funding a portfolio 32 times as big as the fund's net assets at the end of 2007, there wasn't much cushion against the margin calls that are now coming in. online.wsj.com So last year, prior to the worst of the crisis, Carlyle was leveraged 32 to 1. no investment of any kind can withstand that kind of leverage for long. One little decline somewhere and poof, they are gone.