I continue to beat the dead horse of the subprime mortgage markets and their financial pain. That's the way beatings work, they inflict pain. Keep in mind that, unless I am very wrong, every stand alone subprime issuer will either be bought up at rock bottom prices or will be forced into bankruptcy, but that's just my opinion. Does anyone else have a different opinion?
Note that hedge funds that were trading my advice. (Just kidding.) Those guys have access to knowledge and information I can only dream about having, and have been quick to report February earnings.
John Paulson who runs Paulson & Associates reported in a letter to his investors that his fund doubled its money, just this year, betting on a drop in the subprime market.
What about the funds that were long on the subprime markets? Well, they're in no hurry to report results.
Second Curve Capital, Thomas Brown's firm, has been hammered betting on subprime stocks. Brown made his bones as an analyst at Paine Webber, now UBS AG and DLJ, now Credit Suisse. For several years he's looked like a genius loading the boat with subprime issues in search of higher yields. His funds are down as much as 10% in January and if he didn't change strategies early in February, his numbers for last month will probably be worse. His biggest holdings are my biggest dogs. Will anyone remember Accredited Home Lending in a few months? Doubtful.
©2007 Angel Reyes
Read more articles by Angel Reyes and Brian Cuban at BrianCuban-AngelReyesBlog.com.
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