Subprime Winner Greg Lippmann Lost Money In High-Yield Corporate Debt Recently

Greg Lippmann

One of the few guys who predicted the subprime crisis and bet that the bubble would pop, Greg Lippman, is struggling to perform well this year at his new hedge fund literally just launched his hedge fund (in October), and we were a little harsh.

His fund manages ~$400 million, it’s just out the gate, and it’s up 1.67%. 

That’s pretty cool, especially considering that tons of hedge fund managers are just giving up in this environment because (it seems) they can’t find enough to invest in.

To put LibreMax’s returns in context, Lippmann’s fund, LibreMax‘s, 1.67% returns so far are just barely over the average hedge fund returns for October, which were 1.5%, according to Bloomberg data.

From Bloomberg:

LibreMax Capital LLC’s fund gained about 1.67% in October.

“Returns were driven by the rally in the overall mortgage market as well as strong trading gains during the month,” the firm said in a letter to investors.

“While the press about foreclosure risks has been prevalent, the RMBS market has largely shrugged off these headlines.

“We agree with this sentiment and believe that current prices, broadly speaking, have already factored in the possibility of extended foreclosure timelines.”

It’s no 7.7%, like Clive Capital returned last month, but the two funds are investing in totally different markets (Clive in commodities), and Lippmann invested in high yield corporate debt.

The fund lost money last month on hedges involving high- yield corporate debt, according to the letter.

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