New Hedge Fund Aims To Cash In On Mortgage Crisis

Feb 4 2008 | 9:58am ET

Oxford Funding Corp. is taking advantage of cheap deals in the housing market and has formed a hedge fund which will invest in discounted portfolios of residential and commercial mortgages.

The new vehicle, the Oxford Opportunistic Mortgage Fund, will invest in performing, sub-performing and non-performing mortgages purchased on the secondary market at substantial discounts to face value.

The fund's strategy will be to hold, modify if necessary, and ultimately liquidate the mortgage assets at significant gains. The fund and its investors will participate in the yields generated during the holding period, and from gains on the sale/liquidation of the mortgage assets.

The fund, which is managed by Houston, Texas-based Oxford Management Capital, is currently being marketed to accredited investors.

"The fund gives Oxford Funding another vehicle and another opportunity to profit from disruptions in the current mortgage markets," said Ron Redd, Oxford's CEO. "There is presently so much opportunity in the market; we want to capitalize on as much as possible."

"This will give us the ability to buy more and make more than we have done to date," said Robert Dunn, president of Oxford Funding. "The Fund will take us to the next level in terms of the type and size of portfolios we can buy," he stated.

Last week Oxford announced that the 2007 annualized rate of return on its portfolio of loans exceeded 90%.

"With giant companies like Citigroup announcing a quarterly loss of $9.8 billion and Merrill Lynch writing down $14.1 billion last quarter and UBS warning of an estimated $14 billion loss and Fidelity National announcing $44.9 million in fourth quarter losses, we feel pretty good about the favorable returns we're experiencing," Dunn said.

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