These are the companies and executives who take advantage of other companies’ moments of uncertainty – and even distress – to make opportunistic acquisitions. These are undoubtedly rather unsavoury financial transactions, and some are as unethical as the laws of the market themselves. But they are necessary, just as scavengers play a prominent role in the food chain, or scavengers.
A company in genuine difficulty or already bankrupt must be utilised appropriately by others. Its assets, human resources, tangible fixed assets, goodwill, etc. – everything must be recycled for the good of the ecosystem. Takeovers and acquisitions of valuable parts of what was once (perhaps just yesterday) a romantic, generational corporate adventure form part of Darwinian natural selection. Life and death in the jungle That’s how it is.
As early as July, the first blatantly obvious investment opportunities began to appear scavengers, such as the Distressed Subprime Fund Marathon.
Today we can see plenty of examples of scavengers having a field day, although some prefer to call themselves sharks: Blackstone, Citadel or Deutsche Bank itself. But not all of them are simply scavengers with the the ability to turn a crisis into an opportunity but amongst them we also find illustrious visionaries such as Passport Capital LLC, which was already unwinding its subprime positions before the summer, thereby securing substantial capital gains and earning the recognition and admiration of its competitors.
Elephant hunters, scavengers, sharks, scavengers… It doesn’t matter who they are or what we call them; they form a vital part of the food chain. So vital, in fact, that I would say they contribute more than almost anyone else to the sustainability of the economic system, or rather, Ecosystem. I have the utmost respect for all of them, as they are the best antidote to the effects of the panic and hysteria displayed by some.