"Everybody hates the word subprime. You bring it up and it's a dirty word, nobody wants to discuss it," Kinsey-Quick said in an interview late on Wednesday. "Everybody's just dumped it. "You can get a high IRR (internal rate of return) out of these things by buying up some of these pools." Prices are now too low relative to expected default rates, he said.It's a small investment, sure, but it's interesting to see fund managers start heading back to the well here.
Thames River Goes Long on Subprime MBS
Here's some food for thought as we head into the weekend: at least one fund manager is telling the press that he's going long on subprime mortgage-backed securities. This month. Yes, really. UK-based Thames River fund manager Ken Kinsey-Quick told Reuters this week that his firm went long on subprime MBS -- Kinsey-Quick manages roughly $2.3 billion in a fund of hedge funds. His current move into a long position is tentative, to understate things, given that he's risking only 1 to 1.5 percent of fund assets, but it reflects a growing industry sentiment that wonders if the worst may finally be over. At least for subprime. From the story: