New ‘Crisis Investing’ Hedge Fund To Target Troubled Stocks

by Carla Johnson, Investors Offshore.com

07 March 2005

Joe Feshbach, who is best known for being one of the most active short sellers of stocks during the 1980s, has established a new hedge fund which specialises in the buying of shares in troubled firms.

Using a strategy dubbed ‘crisis investing,’ the hedge fund, known as Joe Feshbach Partners LP, will seek out firms whose stock price has fallen dramatically as a result of negative news, such as accounting errors and government investigations, but which exhibit signs of undergoing a strong recovery.

"I'm looking for companies with strong underlying businesses that are profitable, have strong balance sheets and where the likely impact of a crisis has been overestimated by the market," Feshbach revealed in an interview with CBS Marketwatch, published last week.

"I use crises as a trigger point to start researching an opportunity," he added.

Joe Feshbach, along with his brothers, Matthew and Kurt, made a name for himself in the 1980s by building a hedge fund business that was based on actively shorting stocks, a pursuit that earned the brothers the nickname of ‘stockbusters.’

According to CBS, Feshbach claims to have achieved returns of 80%, excluding fees, after using the crisis investing methodology to trade his own money.

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