“The consumer has to be an idiot to take on those loans,” John Devaney, chief executive of United Capital Asset Management, said in May, referring to dicey adjustable-rate mortgages. But since there were plenty of “idiots” out there, and legions of lenders eager to serve them, Devaney and other hedge fund managers eagerly devoured the securities confected by investment banks from batches of dubious home loans…
In March, Devaney bragged that mortgage-backed securities were one of his “best-performing investments.”
…In June, Devaney’s Horizon funds booked a loss of more than 30%… Shortly after, United Capital suspended redemption requests by investors trying to pull out.
Devaney did not return calls for comment.
From Business Week.