Who's Profiting from the Subprime Bust

As the market in shaky mortgages collapsed, some hedge funds raked in profits by betting on a decline in the ABX subprime index

There has been a lot of pain in the market for mortgages to people with shaky credit histories. Small, so-called subprime lenders are filing for bankruptcy. Shares of big lenders New Century Financial (NEW), NovaStar Financial (NFI), and Fremont General (FMT) are getting crushed, as concerns about rising customer defaults mount. But through all the misery, some savvy hedge funds are posting big gains.

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