NEW YORK – European investors including UK hedge funds may drop U.S. subprime mortgage investments given a lack of transparency and mispricing of risk, two business professors said on Thursday.
Joseph Mason, a professor at Drexel University’s LeBow School of Business, said investors in Europe besieged by news of surging mortgage delinquencies are “rethinking their decisions” to invest in subprime debt or shares of subprime lenders.
“A lot of UK hedge funds aren’t sure what they are holding now,” Mason said on a conference call hosted by the Hudson Institute, a Washington, D.C.-based political and economic research group.
Mason, joined by Oliver Arentz of Germany’s University of Cologne, said the investors — like many Wall Street banks — aren’t discussing the issue publicly because they don’t want to call attention to themselves. They also don’t want to mislead or be perceived as “industry shrills,” he said.
