The somber news for investment banks continued today with Merrill Lynch’s dismal first quarter earnings report. The investment bank reported a $1.97 billion net loss and net write-downs totaling $1.5 billion, and said it would cut 2,900 more jobs. Compared to some other investment banks’ woes this quarter, though, Merrill doesn’t come off looking quite as bad – UBS reported a $12 billion loss and $19 billion write-down in Q1 (after which its chairman stepped down), and Deutche Bank wrote down $3.9 billion in the first quarter.
While banks are recording massive write-downs due to the subprime meltdown, hedge fund managers, like John Paulson, number one on Alpha Magazine‘s 2007 ranking of highest-paid hedge fund managers, are making billions shorting the subprime market. In 2007, Paulson, who also topped Forbes‘ list of Wall Street’s Top 20 Earners for 2007, earned $3.7 billion shorting the subprime market. Seventeen of those who made Forbes’ top earners list are hedge fund executives.
Tags: Hedge funds, Merrill Lynch
