Thought Paulson & Co.’s 575% return so far this year from shorting subprime was jaw-dropping? Get over it already. Andrew Lahde’s Santa Monica-based Lahde Capital — set up only last year — has apparently done a ten-bagger shorting subprime in 2007.
In a letter to shareholders it said it was up 1,000% this year, after fees. Without disclosing too much about its approach, the firm apparently loaded up on derivatives around problem companies, and rode ‘em home this year to boffo returns.
According to the FT, he has begun returning money to investors, saying that the halcyon days for shorting subprime are over.
So, sunshine-only ahead? No way. While he’s put some money into gold, he has also raised a new fund to short commercial real estate, and yet another to play more broadly in credit markets.
“Our entire banking system is a complete disaster. In my opinion, nearly every major bank would be insolvent if they marked their assets to market.â€
You can almost see him grinning from here at the happily unhappy ending.
As an aside, expect a blizzard of funds to come forward over the next few weeks playing up their subprime gains. However, like hedge funds that said they made oodles shorting the dot-com collapse, most will be lying — or at least being highly selective about data and strategies — but that’s normal stuff at times like this. You gotta cut hay while the sun shines.