SPM Launches Mortgage Credit Fund

Sep 12 2007 | 7:44am ET

Structured Portfolio Management, a Stamford, Conn.-based $675 million hedge fund shop that specializes in mortgage backed securities, last week launched a new fund to take advantage of the liquidity issues stemming from the subprime crisis.

The SPM Directional Mortgage Credit fund will purchase highly rated paper (AAA, AA) at a discount as funds are forced to sell off their stronger securities due to margin calls.

“It’s an attempt to capture the assets that are coming out of the current mess from the subprime mortgage fiasco,” said Don Brownstein, CEO of SPM.

“We have another fund that has benefited from shorting the subprime market and now we’re taking the other side of the picture. The subprime market is a sad, sad thing, but not for everybody.”

“We saw this coming last January when we opened up one of our other directional funds, which is up triple digits,” said Donald Sussis, vice president of SPM. “We also have a volatility fund that has been in the double digits since May. We intend to benefit from opportunities and not just from misery. We’re not highly leveraged and do not intend to be this time around and that’s one of the reasons why we’ve had success in this tumultuous market.”

Brownstein declined to say how much the fund launched with, stating only that the firm will limit investments into the new fund to no more than $500 million. He also declined to reveal its fee structures, stating only that it charges industry standard fees.

Prior to founding the firm in 1997, Brownstein ran a subsidiary of Caisse de Depot et Consignations, CDC Servicing, in New York.


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