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Distressed Securities

   Also found in: Wikipedia 0.01 sec.
Distressed securities
A security of a firm that has declared or is about to declare bankruptcy. In the context of hedge funds, a style of management that focuses on securities of companies that have declared bankruptcy and may be undergoing reorganization. Investment holdings can include bonds as well as stock in these firms.

Distressed Security
A security in an unprofitable company, or in a company believed to be unprofitable. This is considered to be a high-risk security with the potential for high return because financial distress often precedes corporate restructuring. This may make the company profitable very rapidly. On the other hand, the potential for default is very high.


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At present, the Mutual Series investment team comprises more than 25 portfolio managers, analysts and traders with an average of over 16 years of industry experience, including a dedicated distressed securities team.
The reported decision comes two weeks after the US Congress voted to allow the government to spend 700 billion dollars to buy distressed securities tied to mortgages.
What talent has come out of the banking and insurance companies has been migrating to hedge funds or investment banking, he says; that's true in Europe as well, where he has heard of specialists in distressed securities being able to command multiple-year guarantees and a seven-figure income.
 
 
 
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