Greg Lippmann co-founded LibreMax Capital in October 2010 and has been one of the most successful new comers in the investment industry. Lippmann’s claim to fame was his mention in Michael Lewis’, The Big Short: Inside the Doomsday Machine, which recounts the housing meltdown and the subsequent creation of the credit default swap market. Lippmann is mentioned in connection with his choice to bet against the credit debt obligations (CDOs) in 2007-08 crisis which resulted in huge gains for him.
LibreMax Capital is gaining big in the running year with a return of almost 16 percent on the flagship fund for the first three quarters, this fund is setting the bar high for a number of its peers. In an investor letter, the reported AUM has now exceeded $2.3 billion, which is hugely impressive, given that the fund is only two years old.
The LibreMax Capital Partners fund gained 8 percent in the third quarter. The fund profited equally from all of its strategies and sectors in Q3. The fund has increased exposure in commercial real estate and believes that the sector will continue to be the strongest beneficiary of the Fed’s quantitative easing. Going forward, investments in collateralized loan obligations (CLOs) and consumer asset backed securities have been increased, while those in subprime mortgage were reduced. The fund is also bullish on the prospects of residential mortgage backed securities.
In the sector of commercial real estate, the fund sees tailwinds in commercial opportunities in multifamily units and hotels, where the demand has expanded but the supply has been limited. But, growth in retail space may be stressed because of increasing dominance of online retailers. In the case of the office space sector, Lippmann sees mixed signals and says that it is hard to identify a trend. The fund believes that the housing market is poised for more growth and demand has been increasing steadily. Lippmann thinks that the housing sector has now under-performed for a number of years and is now set for growth.