Hedge funds and institutional investors are starting to launch distressed mortgage funds to take advantage of an “unbelievable” buying opportunity, but they say they are running into resistance from risk-averse prime brokers.
Steve Persky, a principal at Dalton Investments, said his group was starting a distressed mortgage strategy for high net worth and institutional investors. “This is one of the best distressed sector opportunities I have seen in my lifetime,” said Mr Persky, who has been investing for more than 20 years.
“Prices have collapsed to such a level that some securities assume you will never get any capital back....It is an incredible buyers' market. Institutions are desperate to sell. There is such a huge flight to quality, it has gotten very extreme.”
But some investors said it was too soon to start buying distressed mortgages.
Kent Wosepka, who heads absolute return strategies at Standish Asset Management, said: “We have been talking about this for six months but I think it is a bit early. Prices are down a lot, but we're likely to see home prices depreciate by 15 per cent in 2008. There are a few macro things that need to be more firmly in place before we would do a mortgage fund.”
He said Standish had been buying opportunistically, picking up distressed securities at 5 cents in the dollar.
No comments:
Post a Comment