Tags: paulson | debt | bonds

He Bet Big On the Meltdown, Now Buying Up Assets

By    |   Tuesday, 16 Jun 2009 11:42 AM

Paulson & Co., the hedge fund that chalked up more than $3 billion correctly wagering on a U.S. housing meltdown, is now going in the opposite direction.

The $28 billion company led by John Paulson is purchasing mortgage-backed securities and distressed debt, Bloomberg reports.

With the prices of those assets depressed by the global financial crisis, Paulson sees them as bargains.

“We’ve been adding pretty steadily to our long distressed positions,” Sandra Lee, a senior vice president at the New York fund, said at a conference in Hong Kong, Bloomberg reports.

“Where we shorted the lower quality subprime securitizations, we’re now going long the better-quality jumbo, prime securitizations.”

As for distressed debt, Paulson likes that owed by banks and finance companies, particularly those receiving taxpayer assistance, Lee says.

“That’s often space distressed managers traditionally tend to overlook,” she told Bloomberg.

“We’ve been amassing quite a bit of assets in this area.”

Paulson isn’t the only big-time investor looking at real estate.

Hotel legend Barry Sternlicht just formed Starwood Property Trust to write and invest in commercial real estate mortgages.

The company plans an initial public offering to bring in up to $500 million.

“The next five years will be one of the most attractive real estate investment periods in the past 50 years,” Starwood Property said in a regulatory filing.

“We believe that there will be a significant supply of distressed investment opportunities from sellers and equity sponsors of real estate.”

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Paulson & Co., the hedge fund that chalked up more than $3 billion correctly wagering on a U.S. housing meltdown, is now going in the opposite direction.The $28 billion company led by John Paulson is purchasing mortgage-backed securities and distressed debt, Bloomberg...
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2009-42-16
Tuesday, 16 Jun 2009 11:42 AM
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