November 2007
How to succeed in a crisis
The credit market seizure vindicated a few brave hedge fund managers who had spotted the sub-prime crash coming, positioned themselves deftly, and made huge returns from it. These managers recount the challenges of deploying funds against the long-only herd, outline expectations for worse market disruptions ahead and analyze the public policy responses that threaten the potential returns of many investors now seeking to profit from distress. Peter Lee reports.
AT WEDDINGS, YOU never know whom you might end up sitting down to eat with. For Kyle Bass, managing partner of Hayman Capital Advisers, a Dallas-based hedge fund, life changed at a wedding in Spain last year when he met the head of the securitization business at a leading Wall Street firm.
The other guests were perhaps less than enthralled by the conversation but Bass, who manages a global special situations fund, was riveted by it. "Basically he explained to me how Wall Street had been forced to invent the mezzanine CDO market in order to export, principally to new money investors in Asia, the sub-prime residential mortgage backed securities the Wall Street machine was churning out."
It was one of those moments when scales fall from the eyes. Bass suddenly saw that the US securitization industry had been pouring out toxic waste on an epic scale and was now...
You must be a subscriber to access this archived content.
If your subscription includes access to the archive, please log in now to view.
To gain access to this content visit the subscription page or call our hotline on +44 (0)207 779 8999.
Subscribe online now and save up to 30% on your subscription.
If you are a trialist or subscriber, please enter your username and password at the top right-hand side of euromoney.com
Subscribers to Euromoney benefit from:
- 12 months access in print and online - on euromoney.com, read the latest issue early online, search for specific developments by region or sector, interrogate the results of Euromoney's benchmark polls, and view the archive dating back to 1996
- More than 30 specialist research guides free
- The results of Euromoney’s polls and surveys
- Tailored RSS news feeds direct to your desktop
- News delivered directly to your mobile device or PC
- Personalised email newsfeed of 'Top stories' and 'Breaking news'
Click here to subscribe