LibreMax Moves From Residential To Commercial MBS

Nov 20 2012 | 2:00pm ET

Having profited handsomely on residential mortgage bets this year, LibreMax Capital is turning its eyes towards commercial real-estate.

The New York-based hedge fund told investors in its quarterly letter that it was "excited about the opportunities" in commercial mortgage-backed securities. The firm, founder by four former Deutsche Bank traders, including Greg Lippmann, said that it had increased its holdings of CMBS, as well as collateralized loan obligations and consumer asset-backed securities. It has also reduced its exposure to subprime mortgages, which contributed mightily to its 8% quarterly gain and 17% return through September.

"As much as the [Federal Reserve's] QE3 announcement in September has demonstrated the potential to positively affect the RMBC market, residential lending remains constrained," Lippmann wrote in the Monday letter, which was reviewed by Reuters. "By contrast, quantitative easing has had, and will continue to have, a meaningful impact on commercial lending, as lower rates improve borrowers' ability to refinance across property types."

"While we still see tremendous value in RMBS, we have also been able to source several large opportunities in shorter duration non-mortgage backed bonds," he added.

Lippmann told clients that LibreMax's strong 2012 continued into October, when it returned 2.21%. He said the gain was attributable in no small part to "a large consumer ABS trade," and that the firm had cut its student loan exposure while adding credit card, CMBS and CLOs.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.