John Paulson Buys Prime, Jumbo Mortgages


Everyone’s been talking about how it’s no longer a subprime problem, and how prime borrowers are bound to suffer the same fate. But John Paulson — who seems to be in the news every day now for whatever it is he’s going long on — sees value in prime, jumbo mortgages.

Bloomberg: “We’ve been adding pretty steadily to our long distressed positions,” Sandra Lee, a senior vice president at the New York-based fund, said at a Euromoney conference in Hong Kong yesterday. “Where we shorted the lower quality subprime securitizations, we’re now going long the better-quality jumbo, prime securitizations.”

Paulson is buying the debt of banks and finance companies, especially those that received government help, according to Lee.

“That’s often space distressed managers traditionally tend to overlook,” she said. “We’ve been amassing quite a bit of assets in this area.”

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