Small Hedge Fund Scores 1,000% Return

Shorting subprime securities may be most profitable bet of all time
By Jim O'Neill,  Newser User
Posted Nov 26, 2007 3:17 PM CST
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(Newser) – A small Californian hedge fund bet against subprime-linked securities and earned its investors a cool 1,000% profit this year, making Lahde Capital one of the world's best-performing funds of all times, the Financial Times reports. In all, hedge funds that shorted subprime loans appear to have made the single most profitable trade of all time, reaping over $20 billion.

But Lahde's owner, Andrew Lahde, has begun returning funds to investors, saying the party's over for subprime losses. "The risk/return characteristics are far less attractive than in the past," he wrote to his clients. Two months ago Lahde started a fund betting against commercial real estate; it’s posted a 42% return so far.