Bringing you live news and features since 2006 

Hedgeweek Comment: Hedge fund sees opportunity in “new sub-prime”

RELATED TOPICS​

As world grapples with the consequences of the implosion of the US sub-prime mortgage sector, some hedge fund managers seem to have already spotted a comparable market, following reports t

As world grapples with the consequences of the implosion of the US sub-prime mortgage sector, some hedge fund managers seem to have already spotted a comparable market, following reports that funds are now turning their attention to student loans.

Jim Chanos, founder and president of Kynikos, one of the best known short-selling US hedge funds, is reported to have student loan providers high on his list to short in the near future. ‘This industry has much in common with the sub-prime mortgage industry,’ he is quoted as saying. ‘Things do not look very bright.’

More than two-thirds of American university students rely on loans to pay for their college education, but applications are being turned down in record numbers as the fallout in credit markets makes many types of loan impossible to write.

More than 137 lenders that participate in a US government-backed student loan programme have reportedly been forced to suspend operations in recent weeks, and another 33 firms have stopped issuing loans to students at private universities.

Analysts say that in addition to the troubled financial markets, changes in the law have also made the provision of student loans a lot less attractive to lenders. Hedge funds, now ready to resume to return to short selling with a vengeance after the ban on shorting financial stocks was lifted by the SEC, sense blood in the water.

Latest News

Amundi’s ETF Market Flows Analysis for May finds that global ETF inflows were EUR105.1 billion with US-domiciled equity funds accounting..
MerQube has announced the appointment of Dave Mueller as Chief Financial Officer. Mueller brings 17 years experience operating in corporate..
Northern Trust Asset Management (NTAM), has announced that David Abner is joining as Head of Global ETFs and Funds...
Nvidia’s market cap surge to more than USD3 trillion making it the second most valuable company in the world almost..

Related Articles

CN Tower, Toronto
The winners were announced in the second ETF Express Canadian awards at the event held at The Quay in Toronto,...
Darren Johnson, Komainu
Custody specialist, Komainu, was launched in 2018 as a joint venture between Nomura, digital-asset investment manager, CoinShares and blockchain business,...
Stuart Chaussee
In January this year, global data and business intelligence platform, Statista reported that there are now more than 8000 ETFs...
Ethereum coin
Last week saw Australia launch spot bitcoin ETFs, with Matteo Greco, Research Analyst at Fineqia International, writing that Monochrome Asset...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by