Updated from 4:26 p.m.
It is looking like a bear of a summer for Bear Stearns (BSC – Cramer’s Take – Stockpickr) hedge fund manager Ralph Cioffi.
Wall Street learned Tuesday just how bad the carnage is in two of Cioffi’s funds, a month after they nearly collapsed under the weight of bad bets on the swooning subprime mortgage business. The two funds chock full of esoteric securities — High-Grade Structured Credit Strategies Fund and its sister vehicle, High Grade Structured Credit Enhanced Leveraged Fund — are now worth less than 10 cents on the dollar, according to media reports.
Sources say investors had been expecting a recovery of around 50 cents on the dollar for the less leveraged fund. Bear shares fell almost 3% in after-hours trading.
The credit markets and parts of the stock market — particularly Bear’s own shares, which are down nearly 20% this year — have already felt subprime pain. The fear in some quarters is that Bear’s pain could have a cascading effect that forces hedge funds and others on Wall Street to offload hard-to-sell assets in a fire sale.
