John Paulson Going Long on Prime, Jumbo Mortgages

Top money manager John Paulson of Paulson & Co., the hedge fund that raked in more than $3 billion shorting the housing market amid the 2007 subprime crisis, sees value in prime, jumbo mortgages.

From Bloomberg: “We’ve been adding pretty steadily to our long distressed positions,” Sandra Lee, a senior vice president at the New York-based fund, said at a Euromoney conference in Hong Kong yesterday. “Where we shorted the lower quality subprime securitizations, we’re now going long the better-quality jumbo, prime securitizations.”

The…$1.48 trillion of losses and writedowns at financial institutions worldwide have weakened companies’ ability to pay their debt.

Paulson is buying the debt of banks and finance companies, especially those that received government help, according to Lee.

“That’s often space distressed managers traditionally tend to overlook,” she said. “We’ve been amassing quite a bit of assets in this area.”

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