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Passport Mortgage-Bond Manager Kong Leaves After Strategy Shift

Mortgage-bond trader Jeff Kong left Passport Capital LLC last month after the $3.1 billion hedge-fund firm run by John Burbank reduced its focus on the securities.

Kong departed after San Francisco-based Passport Capital sold its entire portfolio of government-backed mortgage debt in the second quarter as the market was roiled by concern that the Federal Reserve would cut its $85 billion in monthly bond purchases. Kong, who was based in Westport, Connecticut, and managed mortgage-bond investments for Passport, said in a telephone interview that he’s “exploring opportunities” to join another investment firm.

It was an “amicable departure,” Steve Bruce, a spokesman for Passport at ASC Advisors LLC, said in an e-mail. “Jeff and Passport recognize that the fit is no longer ideal as things have evolved. Passport wishes to focus on its core long/short equity strategies while Jeff wishes to grow an agency MBS strategy that has become less of a priority for Passport.”

Kong, 54, had previously spent 10 years at Don Brownstein’s Structured Portfolio Management LLC as manager of its $1 billion Structured Servicing Holdings LP, Passport said in a 2011 statement announcing his hiring. The fund returned 50 percent in the first 10 months of 2010, putting it at the top of the Bloomberg Markets list of the 100 best-performing hedge funds managing $1 billion or more.

Structured Portfolio Management sued Kong for $10 million in 2010, saying he violated a non-compete clause by joining a rival. In a counterclaim, Kong said the firm owed him $74 million, the Connecticut Post reported at the time. The actions in Connecticut Superior Court in Stamford were withdrawn in March 2011, court records show.

Before Structured Portfolio Management, Kong worked at Donaldson, Lufkin & Jenrette, now part of Credit Suisse Group AG, and Greenwich Capital Markets Inc., which is now RBS Securities Inc.

To contact the reporters on this story: Jody Shenn in New York at jshenn@bloomberg.net;

To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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