In an FT article today, Hedge Funds Profit From Subprime Bets, it's reported that hedge funds who bet against subprime loans found themselves at the top of the performers list for June.
...some fear that undisclosed or mis-priced investments in the hard-to-value bonds and equity of structured products linked to subprime, such as collateralized debt obligations, could lead to surprise losses at some funds as they report later this month. Christian Zugel of New Jersey-based hedge fund manager Zais Group, said in a note to investors last week that losses from residential mortgage CDOs could reach $60bn-$100bn, far more than the $52bn estimated on Monday by Credit Suisse.
“We believe we are entering a severe crisis, with potentially heavy losses for many market participants,” Mr. Zugel wrote.
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