As Hillary Clinton and Barack Obama present their housing crisis proposals, hedge funds attempt to solve the problem themselves. Is there a trade here?
Mortgage lender and investor Thornburg Mortgage Inc. said it will raise $1.35 billion through a private-placement deal to help keep the company in business and avoid bankruptcy, explains Karen Finerman.
The capital raising efforts, coupled with recent Federal Reserve actions to help improve liquidity in the credit markets, could provide some stability she says.
However, it’s important to note Thornberg is not subprime, it’s very high-end.
I think it’s a great company, adds Tim Seymour. It’s a classic case of hedge funds being the most efficient player in the market.
Facing potential bankruptcy, Thornburg raised the money to help alleviate margin calls and demands for more collateral from its creditors. Thornburg's creditors agreed to suspend any future margin calls for about a year if the company raises $948 million by Thursday.
Had Thornburg faced more demands from its creditors, it's unlikely it would have been able to stay in business, according to published reports.
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Trader disclosure: On Mar.27, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (YHOO), (DIS), (INTC); Finerman Owns (GS); Finerman's Firm Owns (DSW), (MSFT), (SUN), (TSO), (VLO), (WMT), (YHOO), (NYX), (PM-WI); Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY); Najarian Owns (BKC), (MSFT), (NOK), (ORCL), (TSO), (XLF), (YHOO), (AAPL); Najarian Owns (AA) Calls, (CCU) Calls, (COP) Calls, (NVDA) Calls, (BSC) Calls, (CHK) Calls; Najarian Owns (LEH) Puts, (MER) Puts, (USB) Puts, (OIH) Puts; Seymour Owns (CFC), (F), (MER), (MSFT), (TMA), (AAPL), (TSO); Seygem Asset Management Owns (TSM); Charles Schwab Is A Sponsor Of "Fast Money"