Latest news with #MudrickCapitalManagement
Mint
a day ago
- Business
- Mint
Higher Rates Widen Options for Distressed Players, Mudrick Says
(Bloomberg) -- Since 2009, when Jason Mudrick set up his fund Mudrick Capital Management, the world of distressed debt investing has seen three major changes: private equity plays a larger role in the economy, low rates have encouraged highly leveraged capital structures across sectors and there's weaker financial documentation. Traditionally, distressed debt opportunities have emerged when the economy wobbles or specific industries face challenges. But the hike in interest rates in 2022 following a boom in leveraged buyouts stressed companies across sectors, as a majority of firms did not correctly hedge rate risk, Mudrick said on Bloomberg Intelligence's Credit Edge podcast. 'The beauty of this is it impacts all borrowers, not one industry,' said Mudrick, the chief investment officer of Mudrick Capital. 'So we have a very diverse opportunity set, which is very unique to this cycle.' The rush of LBOs came with weak debt documentation, which have allowed companies to move around assets and to pit creditors against each other in an effort to raise more liquidity or reorganize their capital structure outside of bankruptcy court, a maneuver known as a liability management exercise. These type of transactions have elongated the distressed cycle, according to Mudrick, as they often involve distressed debt exchanges, which ratings firms consider a default. That then pushes other investors to sell their holdings. Previously, 'the success or non-success of your investment would ultimately determine on whether you got the valuation right,' said Mudrick. 'Today it's more complicated. You have to value the business, you have to understand the capital structure today, but you also have to understand how that structure may evolve.' The conditions that determine whether a restructuring will give creditors equal treatment or not has also changed. 'We used to think it was really driven by the sponsor. Some sponsors were more aggressive, others were known as being more friendly,' said Mudrick. 'That's not the case anymore. It's so normal to do non-pro rata transactions that I think almost every sponsor out there will consider them.' As an example, Mudrick mentioned Tropicana, which is majority owned by PAI Partners. The private equity firm has a reputation of being a friendly sponsor and yet did a non-pro rata restructuring earlier this year, he said. On the other hand, Cision has done a consensual deal, though it's owned by Platinum Equity, which historically has had a very aggressive reputation in the space, he said. 'You have to evaluate what does the company need, how important is the discount capture, and how important are other things like liquidity needs or maturity extension,' according to Mudrick. Once a company has gone through a liability management exercise, it's unlikely that it conducts a second one, he said. Creditors often times rework covenants as part of the negotiations, which can limit potential options for the company if it struggles again. That makes the post-LME opportunity 'particularly compelling,' Mudrick said. Click here to listen to the full conversation with Jason Mudrick at Mudrick Capital Management. More stories like this are available on
Bloomberg
21-03-2025
- Business
- Bloomberg
Deutsche Bank, Mudrick Sue Ambac Over $65 Million Transfer
Deutsche Bank Securities Inc., Mudrick Capital Management and other noteholders of Ambac Assurance Corp. sued the bond insurer for allegedly making an unauthorized transfer of $65 million to its parent company. The creditors, which also include CQS and Shenkman Capital Management, said in a lawsuit filed earlier this month in New York the transfer violated a term of Wisconsin-domiciled Ambac's rehabilitation — the equivalent of Chapter 11 for insurers. They pointed out that they have not been paid principal or interest on their notes since 2018.
Yahoo
26-02-2025
- Business
- Yahoo
Hedge funds owners may take dramatic actions as Vertical Aerospace Ltd.'s (NYSE:EVTL) recent 20% drop adds to one-year losses
Given the large stake in the stock by institutions, Vertical Aerospace's stock price might be vulnerable to their trading decisions Mudrick Capital Management, L.P. owns 61% of the company Insiders own 18% of Vertical Aerospace Every investor in Vertical Aerospace Ltd. (NYSE:EVTL) should be aware of the most powerful shareholder groups. We can see that hedge funds own the lion's share in the company with 61% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company. And so it follows that hedge funds investors was the group most impacted after the company's market cap fell to US$371m last week after a 20% drop in the share price. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 42% might not go down well especially with this category of shareholders. Hedge funds are often aggressively managed, usually with the goal of focusing on short-term profits. And given they have significant interest in Vertical Aerospace, they have a lot of power, and if the company's performance doesn't improve, it could lead to them influencing management decisions that aren't in line with long-term objectives. In the chart below, we zoom in on the different ownership groups of Vertical Aerospace. See our latest analysis for Vertical Aerospace Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index. Vertical Aerospace already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Vertical Aerospace's earnings history below. Of course, the future is what really matters. It would appear that 61% of Vertical Aerospace shares are controlled by hedge funds. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Looking at our data, we can see that the largest shareholder is Mudrick Capital Management, L.P. with 61% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. In comparison, the second and third largest shareholders hold about 18% and 4.9% of the stock. Stephen Fitzpatrick, who is the second-largest shareholder, also happens to hold the title of Top Key Executive. Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily. The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO. Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances. Our most recent data indicates that insiders own a reasonable proportion of Vertical Aerospace Ltd.. Insiders own US$68m worth of shares in the US$371m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently. With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Vertical Aerospace. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies. I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - Vertical Aerospace has 6 warning signs (and 5 which are significant) we think you should know about. But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
