Subprime Gives Fund 1000% Return, FTW!

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<p><a href="http://www.ft.com/cms/s/7b6160be-9b80-11dc-8aad-0000779fd2ac,Authorised=false.html">1000% hedge fund wins subprime bet</a></p>



<p>A Californian hedge fund has made more than 1,000 per cent return this year by betting against US subprime home loans, making it one of the world’s best-performing funds of all time.</p>

<p>Lahde Capital, set up in Santa Monica last year by Andrew Lahde, last week passed the 1,000 per cent mark, after fees, following the latest leg of the credit market turmoil. The fall in the value of subprime-linked securities has boosted a group of funds which spotted the problems in advance.</p>

 

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<p><em>In his letter, Mr Lahde said he expected the collapse in value of subprime mortgage-linked securities to be repeated for bonds backed by commercial property loans in a deep recession – which he also predicts.</em></p>

<p><em>“Our entire banking system is a complete disaster,” he wrote. “In my opinion, nearly every major bank would be insolvent if they marked their assets to market.” He also said he would be putting some of his own profits into gold and other precious metals.</em></p>

<p><em>Mr Lahde has used the phenomenal returns to boost his business, launching a fund to bet against commercial real estate this autumn – which made 42 per cent in its first two months – and is in the process of creating a third fund to short credits with a broader mandate.</em></p>

<p><em>Lahde’s first fund, US Residential Real Estate Hedge V Class A, soared 712.8 per cent in the year to the end of October, before this month’s sell-off pushed it past the 1,000 per cent mark.</em></p>

<p>Mr. Lahde might be a reader of Calculated Risk and IHB. But, I thought commercial RE was booming and would save the RE jobs? Quick, get the foreigners here to buy property. They are our only hope now...</p>