Another blown up hedge fund

January 26, 2010 | By Jim Kim

Here's a cautionary tale of how the real estate bubble seduced people who might have known better. Plainfield Asset Management was founded by Max Holmes, a veteran of Drexel Burnham Lambert and D.E. Shaw and an expert in bankruptcy and high-yield debt.

Fortune wonders what it was thinking when it invested $88 million of its limited partners' money to buy land in the Bahamas. All this at the height of the bubble. Unsurprisingly, the fund has burst open, along with its troubled land investment. It's a sad but familiar tale of investors who want to redeem their funds but cannot, of bickering partners, of lawsuits making embarrassing charges. It wasn't supposed to be like this. What's sad is that a man of modest means made it to the pinnacle via hard work and education only to see it all collapse before his very eyes.

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