Too close to the hedge: the case of Long Term Capital Management LP, part 2: near collapse and rescue
Article Abstract:
US hedge fund Long Term Capital Management (LTCM), which almost collapsed in Sep 1998 following the loss of $2.1 billion of its investors' funds, operated extremely secretively. It was also illiquid to investors, who were obliged to place a minimum of $10 million in the fund for three years without the possibility of redeeming their capital during that time. It performed well in its early years, and this encouraged both institutional and individual investors to compete to invest, even though their investments were locked in. Yield differentials became much narrower by the late 1990s, with the risk of inflation seeming minimal. LTCM thus had to lever its bets even more to maximize absolute returns.
Publication Name: European Management Journal
Subject: Business, international
ISSN: 0263-2373
Year: 1999
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Takeover frenzy in telecoms: the case of MCI WorldCom
Article Abstract:
BT, WorldCom Inc.and GTE all bid for MCI Communications. BT's first bid was in 1994 and it bought a 20% equity stake for about $4.3 billion. BT bid again in Oct and Nov 1997. WorldCom's first bid was in Oct 1997 when it offered $30 billion to buy out MCI. The bid was based on the strength of its own shares. GTE put in a counter cash-bid of $28 billion. WorldCom raised its offer in Nov 97 and this was accepted by MCI. WorldCom has to buy out BT's share of MCI.
Publication Name: European Management Journal
Subject: Business, international
ISSN: 0263-2373
Year: 1998
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