The financial illiterate folks over at the Intercept ‘broke’ a story today, revealing the owner of ~$1b in Puerto Rican debt, apparently hidden under elaborate layers of shell companies. This dog’s name is Seth Klarman, legendary hedge fund manager at the $30b aum Baupost.
The Intercept weighs in.
That mystery has finally been solved, with the help of the The Baupost Group, who unmasked themselves to The Intercept. The Baupost Group, a Boston-based hedge fund managed by billionaire Seth Klarman, owns nearly a billion dollars of Puerto Rican debt, purchased under a shell company subsidiary and hidden from public scrutiny. Baupost acquired the debt through an on-paper Delaware-based corporation named Decagon Holdings LLC, whose beneficial owner had been unknown until now.
Though the island, currently recovering from a catastrophic hurricane, has been mired in a borrowing crisis for years, it’s difficult to get precise information about the creditors. Many of them scooped up bonds on the cheap, seeking an astronomical payout by forcing the island to pay them back at par (or 100 cents on the dollar). This has led to widespread suffering, as punishing austerity has been imposed to encourage Puerto Rico to pay back the bondholders in full. (Only now has some of this austerity been lifted in the wake of Hurricane Maria.)
“What’s incredible about this is these people were actually hiding,” said Lopez. “In the case of this person, he’s in Boston which has a large Puerto Rican community … Our work right now will be about activating our community in Boston, letting them know this person has been hiding and making sure we go to his houses and his companies to hold them accountable.”
What in the actual fuck? These people, quite literally, are viewing the world upside down. Baupost is LENDING Puerto Rico money to provide their people with funding they desperately need. Money isn’t free (I can’t believe I have to explain this) and those with money normally charge a fee to let others without money borrow it. Do the folks over at The Intercept believe Baupost should simply give Puerto Rico a billion dollars for free, out of the goodness of their heart. Do they not understand that the island of Puerto Rico has been living off debt for decades and desperately need to maintain their credit in order to finance life?
Naturally, people on Twitter have demonized Klarman, protesting his capitalistic ways as evil.
Send your letters, or post cards from #PuertoRico to:
Seth Klarman
The Baupost Group
10 Saint James Avenue, Suite 1700
Boston, MA 02116— GIS?LL? (@voidofchill) October 3, 2017
#Klarman #Baupost #COFINA buy PR debt cheap SHIELDS ID of investors Payback @100cts on $
COMPLIANT IN MISERY https://t.co/5EWmVHyVjo— Eileen Taylor (@eltpac) October 4, 2017
Wow… #Baupost ? This seems bad. Then again it’s the investment world. #boston https://t.co/99MXkcOnHL
— Madeline Donohue (@MaddyDono) October 4, 2017
CNBC should know better than to report on this as if it was an actual bad thing.
Fucking idiots.
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Buying debt is such an abstract term to my feeble mind.
On a lighter note, take the kids out of school and up to Lake Mohonk Mountain House outside New Paltz, NY. Pricey but worth every penny during the fall time. Rooms have no TV’s but real fireplaces.
What?
What part of my babble has you confused?
They also love to conveniently ignore the fact their own politicians drove them into financial ruin.
So, ok, don’t pay the hedge funds back. Let your LENDERS lose their entire investment. Then what? You’re gonna elect the same criminals into office that put you there in the first place?
Fucking idiots indeud.
Exactly.
There is a huge difference if he bought it at offering or if he paid .30 on the dollar. If he bout them cheap to lobby the Feds to bail him out, then fuck off
If he bought them for .30 on the dollar, the seller thought they were worth less than .30, or at least the risk of them going to zero was too high for their taste. He took on that risk of them going to zero, along with the opportunity to get up to 1.00 back.
How would it have been better or more ethical for the previous bond holder to have kept them?
If I go bankrupt and the bank forecloses on my house, and then the bank sells the house at fire sale prices, is the buyer who got the good deal evil? If he bought it with the intent of rehabbing the house and flipping it, is that evil?
Exsactly!!! It’s one thing to lend out money at a fair market interest rate. It’s and entirely different thing to lend out money at usury rates to desperate people or countries and to demand full payment or “I breaka u face.”
This is another version of the payday-loan scam where 300% – 1200% interest rates to desperate people are standard.
Even the mob has more integrity that this.
“He took on that risk of them going to zero”
It’s all good to that point, but what if he used his insider connection so that the taxpayers bailed him out instead? That’s corruption (or business as usual…), which is what reversion was referring, too.
He looks jewish… We need sarc to explain to us the inner working of money lending and evil doing.
Back in the good ol’ days (before #AG as in #MAGA, and even before #A) king/ruler would seize the gold, throw the jewish lender in jail (to the bonfire) and send the mobs against the rest of them to finish them off. Wipe out the debt… then start borrowing again. rinse repeat. Sarc and his moronic lot just wish it was back to those great days again.
Stop it. Don’t goad him.
Pretending that 3 year old news is breaking is the new journalism.
These people are fucking idiots.
https://www.wsj.com/articles/no-headline-available-1394547910
That’s why we should press for mortgage and credit card debt for all PR citizens to be canceled. If that started to trend, bankers would really start to sweat.
Klarman owns unsecured bonds, no? So that puts him near the bottom of the capital stack in a default and/or BK cram-down (not sure how countries can BK). Take the charge and move on. Not saying walk away from the entire amount, but trying to recover par is absurd.
The “punishment” for PR is that they will not be able to borrow money at reasonable rates for a long time.
Um, PR didn’t borrow money at reasonable rates to begin with. That is why they’re not going to pay it back.
So, no punishment.
Case in point: Argentina is having no trouble selling 100-year bonds yielding 8% and they certainly have no intention of paying pay that back.
“Baupost is LENDING Puerto Rico money”
Ok first of all, this may not even be true. The *original* bondholders are the lenders. Everybody else is just a market participant looking to make a buck on a gamble by buying an asset they believe will appreciate in value.
Secondly, risk and return go hand in hand. The reason that PR bonds pay higher interst rated that UST’s is because their is a higher risk of default. As every true capitalist knows, defaulting is not a moral decisison, it is a business one. The risks t othe defaulter are a lowered credit rating which makes it harder to get funding in the future. This decision is weighed against the costs of paying the bond holders. It’s math, not theology or philospohy.
To put it more simply, owning PR bonds does not make this guy the devil, but it does not make him PR’s savior, either.
dude..take your ball and go home..bondholders are 100% the lenders..the “original” holders sold their bonds and thus got their money back…or else they’d still own bonds.
He’s a finance illiterate.
No, they *didn’t* get their money back because they were smart enough to cut their losses when they realized that the bonds had a higher chance of defaulting than they orignally predicted. Financially literate people understands the risk/reward linkage.
Ah wrong numbersfag
It doesn’t matter who sent PR money first. All bond holders are considered lenders and are treated no differently from whoever was the original buyer. Stop playing the stupid game of semantics.
“All bond holders are considered lenders”
Who’s playing sematics now?
I’m just knocking down the pedestal that you are putting these hedge funds on and pointing out that if somebody pays $0.30 on the dollar for a bond, then they shoulding be shocked or outraged if that bond is at risk of defaulting.
By all fucking means go to a lender that charges less than 100%. Oh…. That’s right there is not one willing to step forward and lend PR the money at less than 100%. So as always happens the borrower shops around and determines that 100% is the best price possible. If it truly was not the best price possible then the blame should be on the government of PR for not going with the best possible price. How is this concept so foreign to so many people? This is the same concept with wages when people go to find a job. I go to the place that gives me the best deal for my services, I don’t go do $300 an hour work for $100, that would be just fucking retarded.
This post is far from $300 an hour quality
WTF am I reading here:
“Money isn’t free (I can’t believe I have to explain this) and those with money normally charge a fee to let others without money borrow it.”
Money is not free??? WTF man??? You mean confetti money like the USD fiat joobux? Not free?? The hofjuden bloody conjure this confetti ex nihilo for us goy (and all the rank-and-file jews) to use like we were nothing but chimps. WTF, man? (((Seth Klarman))) is not doing PR any favors. He’s a Jew. He scooped up PR bonds on the cheap, seeking an astronomical payout by forcing the island to pay them back at par which led to widespread suffering and punishing austerity to force Puerto Rico to pay back (((Seth Klarman))) in full!!! Am I the only here seeing it for what it is? Rape? Fuck’em PR! Default on the usurers.
JESUS FUCKING CHRIST MAN!
sarcrilege: ” TF am I reading here” That’s what we ask ourselves every time you post one of your demented ramblings, you sick Nazi fuck.
Shlomo, knowing I insulted your kind only validates my point because nothing is more insulting to you than the truth. Thank you.
https://tinyurl.com/nxmwzbl
Let’s find out who was short these bonds on the way down, that way the Left can demonize BOTH the buyers and the sellers. Logic be damned.
The varied pension funds of PR are the real story here. The extent to which tRump other circus performers will go to favor the defunct pension plans over bond creditors will set the road map for the US municipal debt market going forward. Marred with potholes and precipitous cliffs. Short MBI (MBIA) monoline is one way to play it. Give the whole space a wide berth in the interim. Cloudy with a chance of hairballs.
This sets a very bad precedent if it happens.
This is no precedent. Just because a country can’t print confetti like the BOJ, ECB and USSA doesn’t mean it can’t make promises that are impossible to keep.
Do you really believe the above printer-countries are going to honor their debt at par? Really?
If so, I’ll grab some post-it notes and put some 1’s and 0’s on then and sell them to you cheap… say .30 for every 100 face “value”.