You've probably never heard of Whitebox Advisors, and they probably prefer it that way.
Though it's got offices on Park Avenue in New York City and in London's West End, among other branches, the hedge fund's headquarters overlook Bde Maka Ska in south Minneapolis.
Founded in the late 1990s, Whitebox makes its investors a fortune by swooping for assets just as they're at their low point, somehow holding its nose in the name of profit over good taste. Among its targets: the Caesars casino chain, a coal conglomerate, and the staggering shell company that is Sears Holdings.
More than a decade ago, Whitebox was ahead of the curve on America's ridiculous real estate market, betting against the bubble to make "untold millions" for clients and fund founder Andrew Redleaf, a St. Paul native who left Whitebox this summer after 20 years.
More recently, Whitebox got itself involved in Puerto Rico's messy financial crisis, buying up $140 million worth of the island territory's debt.
The firm's cozy relationship with consulting giant McKinsey & Company has come under criticism from U.S. Sen. Elizabeth Warren (D-Massachusetts), among others, after the revelation McKinsey has advised on bankruptcies (including Puerto Rico's) without disclosing that it had money invested in Whitebox -- which had, in turn, bought up some of bankrupt party's debt.
That rare moment of public scrutiny has yet to affect Whitebox's bottom line: Since just 2013, the firm's assets under management have ballooned from $2 billion to $6 billion.
This year, Whitebox Advisors started going where even banks won't, "quietly" stepping in as a lender to Remington Outdoor Company, according to a report from Reuters, which says the hedge fund is now the sole financier of a $193 million loan formerly held by Bank of America, Wells Fargo, and Deutche Bank, among others.
Banks like those have faced pressure to extricate themselves from the weapons industry. As Reuters explains, hedge funds like Whitebox, which was a creditor to Remington even prior to the manufacturer's bankruptcy in 2017, "do not share the same reputational concerns." (Whitebox declined to comment for Reuters' story.)
Reputations aside, now seems like as risky a time as ever to get into business with these particular merchants of death: On Tuesday, the U.S. Supreme Court refused to hear Remington's appeal in a class-action lawsuit filed by parents of students killed at Sandy Hook Elementary School in 2012.
Shooter Adam Lanza killed 26 people, including 20 first-grade students and himself, using a Bushmaster AR-15 semi-automatic rifle. Families are suing Remington, parent company to Bushmaster, for making and marketing the "ultimate combat weapons system" (in Bushmaster's words) to civilians.
Allowed to go forward, the Sandy Hook lawsuit poses a serious -- if not existential -- threat to Remington.
But not Whitebox Advisors. From Reuters:
The loan that WhiteBox extended has dibs on Remington’s assets, protecting Whitebox in any future debt restructuring, one of the sources said.
Because, of course. This is America, where we believe in self-defense, whether that means arming a deeply troubled young man or protecting rich people from a risky investment.