Brevan Howard Management LLP, D.E. Shaw & Co. and Angelo Gordon & Co. are among a growing number of funds that have started pools of capital this year to invest in mortgage securities that lack U.S. government backing. They have been lured to the almost $1 trillion non-agency mortgage bond market in part by property prices that are stabilizing after the biggest real estate crash since the 1930s. The entrants have only marginally diminished the number of opportunities, Birnbaum, 40, said in a telephone interview last week.
'There’s billions of dollars of bonds trading a week and they are hotly debated by people who trade them', said Birnbaum, who declined to comment on his fund’s returns. 'That produces an opportunity to make money in this space because valuation opinions are vastly different'.
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