Steve Eisman, the hedge-fund manager who made his name betting against subprime mortgages, will launch a new fund—Emrys Partners—in January.
Four people “briefed on the matter” told Bloomberg Eisman will partner with Rocwood Capital Managment’s Jon Kalikow, Goldman Sachs Group’s Ed Cabral and JAT Capital Management’s Mark Weiner on the long-short fund which will invest in stocks and bonds across industries.
Eisman, formerly with Connecticut-based FrontPoint Partners, left that company earlier this year as allegations a healthcare fund portfolio manager at the firm—Chip Skowron—had traded on insider information caused investors to bail.
An unnamed investor told Bloomberg that Eisman’s Financial Services fund had lost between 14% and 18% at the time he left. Eisman's funds had shrunk to $750 million in January from more than $1 billion in 2010. According to AR magazine, his Financial Horizons Fund, which invests in the stocks and bonds of financial services companies, fell 3.2% in Q1 2011 after having fallen 7.7% in 2010.
It was the Financial Horizons Fund that brought Eisman to prominence—it returned 81% in 2007 thanks to a bet on subprime mortgages, attracting the attention of author Michael Lewis. who included Eisman in his book The Big Short: Inside the Doomsday Machine, as one of the few people who saw the subprime crisis coming.
Reports have been swirling since June that Eisman planned to start his own firm with a team of six or so employees from FrontPoint.