For hedge funds burned by the subprime slide, the disaster was the market equivalent of an act of God: It simply could not be foreseen. But one aptly named hedge fund foresaw, and is profiting handsomely.
Harbinger Capital Partners' bets against subprime mortgages were rewarded as one of its hedge funds has doubled in value, while another has managed a more modest 65% year-to-date return. Its eponymous $11 billion flagship added 5.4% in September is up 65% through last month, Bloomberg News reports, and its $2.5 billion Special Situations Fund has enjoyed even greater success, with September’s 9.9% return bringing its year-to-date to over 100%.
In addition to shorting subprime at the right time, the firm credited a bullish commodities market for the returns.