By MARK DeCAMBRE
June 20, 2008 --
Fortress Investment Group is considering adding another $1 billion to the war chest it's amassed to take advantage of the pain being felt on Wall Street.
The US' first publicly-traded hedge fund is aiming to raise the extra cash on top of the $2 billion so-called "credit opportunities" fund it has been marketing to investors since January to invest in distressed assets.
Fortress' fund likely will look to purchase debt including securities such as mortgage-tainted collateralized debt obligations and leveraged loans that have been stuck on bank balance sheets and have plunged in value.
Writedowns in soured debt total about $400 billion at financial firms.
Some investors, however, still see potential value in the assets, which have been trading at deep discounts.
Last summer Deutsche Bank, Citigroup, UBS and Merrill Lynch were jammed with hundreds of billions in debt on their books, which prevented them from doing future business.
That backlog has been reduced by more than $90 billion - but that still means billions in assets still need to be unwound.
For instance, embattled Lehman Brothers sold $147 billion in loans and bonds but still has more than $600 billion in debt on its books.
A spokeswoman at Fortress in New York declined to comment on the hedge fund's plans.
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