Hedge fund manager Ali Lumsden gained 73% the last time the mortgage-bond market went into meltdown. This time around, the veteran investor is on the wrong side of the crisis.
East Lodge Capital, the firm Lumsden set up in 2013, saw its main hedge fund plunge 26% in March, according to people with knowledge of its performance. Another East Lodge fund fell 16%, said the people, who asked not to be identified because the information is private.
London-based East Lodge specializes in securitized credit, which has taken a hammering in recent weeks as the near-shutdown of the global economy threatens a surge of delinquencies among borrowers.
Lumsden, who has spent over 30 years in the structured-credit markets, made his name as chief investment officer of an asset-backed securities fund at Michael Hintze’s CQS. He averaged gains of 28% annually at the firm’s ABS fund from October 2006 through November 2012, highlighted by the big gain in 2008 when he bet against subprime mortgages and the banks that had loaded up on them.
A spokeswoman for East Lodge, which manages $1.9 billion of assets, declined to comment on the fund’s performance. The firm invests in residential and commercial mortgage-backed securities, collateralized loan obligations and consumer asset-backed securities, according to its website.
East Lodge was not alone in suffering heavy losses in March. The CQS fund he once managed was down more than 40% in the month, while Greg Lippmann’s LibreMax Capital saw its main hedge fund drop about 21% in March. SkyBridge Capital, founded by Anthony Scaramucci, dropped around 22% in that period after several of the structured credit funds it invested in struggled.
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