Credit Vultures peek out

A lot of players are picking through the carnage for cheap assets. Citadel's move to take over the credit portfolio of Sowood Capital Management may prove to be a good one. One of the more proactive moves comes from hedge fund BlueMountain Capital Management, which has $4.5 billion in assets. According to Financial News Online it has set up the BlueMountain Defensive Credit Fund to target undervalued (it thinks) corporate unsecured debt, including high-yield debt. They will buy bonds and then hedge by shorting the appropriate credit default swaps. They may be onto something, as CDS spreads are wide right now. Of course if the overall slump intensifies, the fund could get whacked pretty fast. As of now, the fund has $160 million in capital to invest.  

For more the new fund:
- here's the article
- Goldman Sachs and others are buying into liquidators. Article (Investment Dealers' Digest)