CNNMoney.com- A single hedge fund has made a gain of more than $3 billion (EUR2 billion) at the expense of investment banks by betting on the subprime crisis.
U.S. hedge fund manager Paulson & Co. has turned an investment of almost $500 million at the start of the year into almost $3.6 billion by taking out a form of insurance that started paying out as soon as subprime mortgage securities lost value, investors said.
Four other hedge fund managers – Harbinger Capital Partners, Balestra Capital, Scion Funds and Peloton Partners – have also made substantial gains from subprime, with Harbinger’s fund rising just under 100% for the year to date, according to an investor in the fund.
