The downward spiral in stock prices, a weak housing market and a tough economy have made 2008 a year to forget for most investors.
Yet some bargain hunters are looking for investment opportunities in the wreckage.
One such company, Diversified Mortgage Workout Corp. in White Plains, is targeting sectors that are deeply troubled by America’s housing crisis—distressed subprime mortgage portfolios, real estate and mortgages of troubled homeowners. The company said its goal is to buy such assets at “significant discounts” and eventually realize a profit once the economy turns around.
The company announced today that it will invest $20 million to buy a 23 percent stake in an offshore hedge fund that has a similar investment focus.
“Diversified believes this to be a great entrance strategy for a soon to be highly lucrative opportunity as banks, mortgage companies and investment banks in the United States start to unload its non performing real estate related assets, while the economy starts its recovery under the new incoming administration,” the company said in a written statement.
Diversified said it has the option to increase its position in the hedge fund by another 26 percent within a year.
Diversified did not disclose the name of the hedge fund in a news release. Company officials could not be reached for comment.
In August, Diversified said that it had financial commitments of $50 million from investors to buy subprime mortgage portfolios. It added then that it was negotiating for another $100 million in financing commitments.
“The company is very pleased with the progress that has been made in such a relatively short period of time in attracting investment capital and the interest of additional large sums of investment capital being presented to us,” Victoria Forlenza, president and chief operating officer of Diversified, said in a written statement in August. “With the proper analysis of the portfolios the company acquires and the proper pricing and terms, this will be a very lucrative profit center for the company and its shareholders.”
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