Greg Lippmann, the 41-year-old trader famous for short-selling subprime mortgage securities and the subject of an extensive profile by The Observer‘s very own Max Abelson, is flipping the script on the trade that launched him to credit-crisis fame.
Lippmann left Deutsche Bank this year to start his own hedge fund, Libre Max. In October, he put 44 percent of his fund’s portfolio into purchases of bonds backed by subprime loans, Bloomberg reports.
He’s also not sweating the widely trumpeted foreclosure crisis that threatens to stagnate the market for mortgage securities:
Libre Max is dismissing concern that foreclosure issues, created by loan servicers acknowledging in September that they used false affidavits in court cases, will harm bondholders by increasing how long it takes to liquidate soured debt.
Investors in residential mortgage-backed securities, or RMBS, shouldn’t adjust what they pay, the firm said.
“While the press about foreclosure risks has been prevalent, the RMBS market has largely shrugged off these headlines,” the firm said. “We agree with this sentiment and believe that current prices, broadly speaking, have already factored in the possibility of extended foreclosure timelines.”
With his bullish housing call, Lippmann joins John Paulson among money managers who’ve made a u-turn on the bearish housing plays that made them rich. No word yet on whether he’s printing T-shirts that say “I’m Long Your House!!!” this time around.
mtaylor [at] observer.com | @mbrookstaylor