BlueMountain Made $300 Million On JPMorgan Nightmare

Jul 3 2012 | 1:21pm ET

BlueMountain Capital Management—which is now helping JPMorgan Chase unwind its disastrous derivatives trades—looks like the biggest winner in the bank's debacle.

The hedge fund, run by JPMorgan veteran Andrew Feldstein, is likely to make as much as $300 million betting against the JPMorgan credit default swap index trades, Bloomberg News reports. The profits from the trade have helped nearly double BlueMountain's returns this year: Before JPMorgan announced its multi-billion dollar loss, the hedge fund was up 5.4% on the year. Now, it's up 9.5%.

BlueMountain likely did even better opposing JPMorgan trader Bruno Iksil than Saba Capital Management, whose Boaz Weinstein has received much of the credit for harpooning the so-called "London Whale." Saba is up just 2.3% this year.

BlueMountain is now helping JPMorgan unwind its trades, which could cost it as much as $9 billion. The hedge fund has been quietly buying default protection to cover JPMorgan's trades and then selling it to the bank, helping it exit about half of its exposure.


In Depth

GSAM’s Papagiannis on Liquid Alternatives

May 25 2016 | 5:07pm ET

The popularity of liquid alternatives strategies has blossomed in recent years,...

Lifestyle

From Modern Trader: Stephen Curry is a Black Swan

May 18 2016 | 7:43pm ET

What do the rise of the Internet, the sinking of the Titanic, 9/11, and Stephen...

Guest Contributor

LendingClub and the Question of Internal Hedge Funds

May 19 2016 | 8:42pm ET

Peer-to-peer lending platform LendingClub Corp. has been in the news since the firm...