Greg Lippmann’s LibreMax Capital LLC gained 20.8 percent last year as hedge funds focused on mortgage debt outperformed rivals.
LibreMax’s main fund rose 0.94 percent last month, according to a person familiar with its returns, who declined to be identified because the information is private. The firm had about half of its bullish bets on U.S. home-loan bonds without government backing as of Sept. 30 and also began wagering on commercial-mortgage securities in 2012, according to a November letter to investors.
Hedge funds concentrating on mortgages gained 20.3 percent last year, beating all other categories, according to data compiled by Bloomberg. Firms led by Metacapital Management LP and Pine River Capital Management LP, which also bet on government-backed securities, capitalized on a rally in housing debt as the real-estate market recovered and investors sought higher-yielding assets as rates on benchmark Treasuries reached record lows.
The gains also boosted assets at the managers. Lippmann oversees about $2.4 billion, up from less than $1 billion at the end of 2011, the person said. Jonathan Gasthalter, a spokesman for New York-based LibreMax, declined to comment on the firm’s returns.
Senior-ranked subprime-mortgage bonds issued before the market collapsed in 2007, among the top-performing assets last year, have extended their rally into 2013, returning about 4.6 percent through last week, Barclays Plc index data show.
The notes gained more than 40 percent last year, following a 5.5 percent loss in 2011 as Europe’s debt crisis roiled markets and dealers shrunk inventories. The fund run by Lippmann, the former Deutsche Bank AG trader who bet against the debt before the housing slump, returned about 2 percent in 2011.
Hedge funds that invest in asset-backed securities, which can include mortgage bonds, were the second-ranked last year in data compiled by Bloomberg, returning more than 17 percent.