The Bottom Feeder

Bruce Hendry is at it again, spelunking for bargains in troubled assets.

It’s a vocation for Hendry, and one that’s been extremely rewarding. In the 1980s, he engineered four widely publicized triumphs that established him as an oracle in this arcane corner of corporate finance: huge returns for himself or his clients on the distressed securities of the Erie Lackawanna Railroad, Wickes Companies, and FirstRepublic Bank, and a proxy fight and subsequent reorganization of Kaiser Steel with Hendry at the helm.

The past two decades have taken him in other directions. Hendry’s 1991 purchase of the Schmidt Brewery in St. Paul brought it back into production, though it ultimately failed. So did an ethanol plant that opened at the site later. Hendry still owns the property, renting it out now for use as warehouse space.

He also went into angel investing and bought silver—the physical kind that you store away. He won’t say how much he bought, but does say that he acquired all of it for less than $5 an ounce and got $13 to $18 an ounce for what he’s sold. Some of his silver was stored in the World Trade Center towers in New York City when terrorists destroyed them in 2001. Crews sifting through the rubble recovered it all.

Hendry’s own life seemed on the verge of doom the next year. Days after he turned 60, he was diagnosed with a stage-four mantle cell lymphoma, a cancer that had metastasized to his colon and bone marrow. He and his wife, Sharon, moved to Houston, Texas, for his treatment. Five months and six rounds of chemotherapy later, doctors at the M. D. Anderson Cancer Center pronounced Hendry cancer free.

He remains so today. But rumors about his condition were flying around the Twin Cities at the time. “After I got back,” Hendry says, “I heard that I was dead.”

His return now to distressed-asset investing is a sign of the times. Seasoned investors like Hendry—experienced at bottom feeding—expect banks, government agencies, and others to soon be unloading buckets of troubled properties at dead- minnow prices.

Opportunity Knocks

Hendry recently moved up from limited partner to become a general partner in the Opportunity Partners Fund, a limited partnership set up in Minneapolis two years ago to buy distressed properties.

At first, the fund was called Condominium Opportunity Partners, reflecting its original focus. Fund managers broadened their scope to include all kinds of properties across the country. Hendry points out that troubles—and hence opportunities—have become widespread in more niches of real estate.