Singapore’s Outperforming Merrill Investment

The FT says today that the government of Singapore’s $23-a-share investment in Merrill Lynch was worth just $12.10 per share at the end of 2008, a drop of 47%. A paper loss of more than $2 billion is tough for any investor to swallow, but for a stake in an investment bank bought at the end of 2007, this is actually an impressive outperformance.

Obviously, a stake in Bear Stearns or Lehman would be worth much less. But look at Morgan Stanley, which fell from $53.11 to $16.04 during the course of 2008, a fall of 70%. Even Goldman Sachs fell from $215.05 to $84.39: a fall of 61%.

What’s more, it’s unclear where the $12.10 figure comes from: as the NYT notes, Merrill shares actually closed at $15.83 apiece on the last day of the year. Which would put Singapore’s Merrill loss at 31%, significantly outperforming the S&P 500.

So yes, Singapore lost money on its Merrill deal. But in the annals of bad banking investments, this one’s quite a small mistake, in comparison to say Texas Pacific’s recapitalization of Washington Mutual.