Former GS Trader Who Shorted Mortgages Is Killing It In A Down Year For Hedge Funds

josh birnbaumJosh Birnbaum

Photo: Mark Wilson/Getty Images

The hedge fund managed by a former Goldman Sachs trader instrumental in the bank’s bet against the subprime mortgage crisis is having a stellar year as competitors underwhelm.According to Bloomberg, Josh Birnbaum’s Tilden Park Capital Management, which has $1.1 billion in assets, is up 30 per cent on the year.

That’s definitely a stand-out in a year when typical hedge funds managed to squeeze out returns of only about 5 per cent, Reuters reported.

Ironically, Tilden Park’s good bets on securities backed by loans to borrowers with poor credit drove the fund up 6 per cent in September. The fund has been part of a small group that has successfully returned to investing in the country’s stabilizing real estate market. 

Birnbaum told Bloomberg:

“Some of these recover plays are compelling. When I think about the opportunity set in this market today, versus at the beginning of the year, I think it’s overly simplistic just to look at the rally in prices; you’ve got to look at marked improvements in the property markets and borrower behaviour that account for much of the price gains.”

A congressional panel investigating Goldman Sachs bets against the housing market in 2007 described Birnbaum as “one of the chief architects of Goldman’s big short.”

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