Turmoil in the debt markets has been hitting hedge funds where it hurts for months, but in a contrarian play, Bloomberg is reporting that former Lehman Brothers Inc. executive David Sherr is opening a hedge fund to trade today's most toxic investments: mortgage bonds and asset-backed securities. The Lehman veteran's new fund, One William Street Capital Management LP, plans to start off with over $1 billion in capital, including backing from his former employer.
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Already among the casualties of this asset class in 2008 are Carlyle Capital Corp., Blue River Asset Management, Peloton Partners LLP and Sailfish Capital Partners LLC, while Drake Management LLP is considering shutting its debt funds down, and GO Capital Asset Management has suspended shareholder withdrawals. But as everyone on Wall Street knows, dislocations mean opportunity ... or disaster. - George White
See Bloomberg storySee Dealscape post on hedge fund troubles
