(Bloomberg) -- Greg Lippmann, who famously bet against subprime mortgages before the financial crisis, is expanding his business in securitized corporate loans, the latest money manager to add firepower in one of the hottest debt markets.
Lippmann’s hedge-fund firm LibreMax Capital LLC agreed to buy Trimaran Advisors, which manages about $3 billion of collateralized loan obligations, according to the statement. CLOs package loans to sub-investment grade companies into bonds rated as high as AAA.
Lippmann, whose exploits were chronicled in Michael Lewis’s 2010 book "The Big Short" and a 2015 film of the same title, has previously said corporate debt and equities will face the biggest pain when the next downturn comes. Firms have loaded up on debt amid ultra low interest rates during the past decade, while consumers have borrowed comparatively less, he said at a conference in May.
Money managers have been snatching up near-record amounts of CLOs this year, because the securities typically pay floating rates and offer relatively high yields.
Trimaran Advisors is a New York based asset manager that oversees six CLOs, according to the statement. Trimaran’s chief investment officer and head of its CLO platform, Dominick Mazzitelli, will continue to lead the business after the deal’s close expected by yearend.
Lippmann, a former Deutsche Bank AG trader, helped devise the mechanism used to bet against subprime mortgage debt. After co-founding LibreMax in 2010, Lippmann profited by buying the kind of mortgage debt he shorted during his time at the German lender.
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