Investing to Wealth

"Did you go to Sally's yesterday (Salvation Army)? "Why yes, I bought a nice skirt and a matching blouse."

How about a second-hand hedge fund? A wild idea has been born by Second Market, which describes itself as the world's largest market place of illiquid assets.

The financial crisis has caused many hedge funds and private equity deals to go sour. It seems that these "second hand" entities cannot find buyers for their broken funds and deals.So using American ingenuity, SecondMarket has stepped on the world stage to fill a need. There is an old Chinese proverb that goes something like this: in every crisis there is opportunity. SecondMarket is an example of this.

But of course there are skeptics out there. Some people say it has been tried before and failed because of the need for confidentiality in these circumstances. Let's face it, who wants to advertise a second hand hedge fund saddled with huge losses.

However this did not deter Barry Silbert of SecondMarket. He now has $500 million dollars in assets listed for sale and more that 150 of Second Market's 2,000 customers are interested in placing bids. Mr. Silbert said: "there are billions of dollars in this stuff coming up for sale this year." He estimates that $130 billion dollars of private equity deals are expected to be put up for sale.

Sellers are facing a weak market and can expect about 50 cents on a dollar for their assets. SecondMarket has already traded $1 billion dollars of assets since its inception in 2005 including illiquid blocks of public equities, auction rate securities and bankruptcy claims such as those pending at Lehman Brothers.

Do you think Barry Silbert will be able to pull this off?

Filed under: Launches, Competitive strategy, Financial Crisis

Want to buy a second-hand hedge fund? Come to SecondMarket originally appeared on BloggingStocks on Fri, 27 Feb 2009 14:30:00 EST. Please see our terms for use of feeds.

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