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Hedge fund Lahde Capital earns 1,000% betting against subprime

Posted Nov 26th 2007 10:52AM by Zac BissonnetteZac Bissonnette RSS Feed
Filed under: Newspapers, Housing

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Imagine earning 10 times your money. On your entire portfolio. In one year.

Andrew Lahde's Lahde Capital, a small California-based hedge fund, has done just that by making big bets against subprime in 2007. A quick glance over the recent headlines indicates that that has been a very, very, very profitable bet.

Given that he had the conviction to go short with leverage, this is probably a guy worth paying attention to. The Financial Times has some quotes from his letter to shareholders, where he announces a return of a capital, saying that "The risk/return characteristics are far less attractive than in the past." Here's some other stuff from the letter:

"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." (emphasis added)

That's pretty scary stuff. Mr. Lahde is predicting a recession, and sees a collapse in the value of bonds backed by commercial property loans on the horizon -- mortgage crisis part deux.

I found a biography of Mr. Lahde in the executive summary for a fund called Dalton Investments (PDF). Assuming it's the same one (also located in California, making me think it is), here's a bit more about him:

Mr. Lahde has extensive experience in company and industry analysis, particularly in the telecom and business services sectors. As a Senior Research Analyst with Roth Capital Partners, Mr. Lahde was instrumental in generating investment ideas and performing in-depth research on individual companies. Prior to joining Roth, he was a Research Associate for the investment bank, Gerard Klauer Mattison, where he covered the wireless sector. As an Investment Analyst at Kayne Anderson Rudnick Investment Management, he focused on analysis of distressed debt and arbitrage opportunities for hedge funds. Mr. Lahde began his investment career in 1995 at TD Waterhouse where he was a Relationship Manager in the Institutional Division. Mr. Lahde holds an MBA from The Andersen School at UCLA and received his BA in Finance from Michigan State University. He is a CFA charterholder and a member of the Los Angeles Society of Financial Analysts and the CFA Institute.

This is one hedge fund manager to keep an eye on, and I'll certainly be taking a look at commercial property loans.

Tags: Andrew Lahde, AndrewLahde, Hedge Funds, HedgeFunds, Housing, inthenews, Lahde Capital, LahdeCapital, Subprime

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