Andrew Feldstein, the Harvard- educated lawyer who leads BlueMountain Capital Management LLC, has had a good run.
His firm boasts just one losing year since it was started in 2003. Assets have swelled to $12.7bn, and he has 150 people in New York and London helping him manage the abstruse derivatives contracts he likes to trade: credit-default swaps, collateralized debt obligations, synthetic CDOs, mortgage bonds, swaptions - the alphabet soup of stuff that went bad in 2008.
Feldstein is best known for his June coup, when he bet against the London Whale - JPMorgan Chase & Co. (JPM) trader Bruno Iksil - who was long and wrong on $100bn in credit derivatives. That play reaped $300m for BlueMountain, according to people familiar with the matter. JPMorgan lost $6.2bn. Feldstein did more than make money. He also helped Chief Executive Officer Jamie Dimon unwind JPMorgan’s trades, earning points with America’s most powerful banker, Bloomberg Markets will report in its February issue.
JPMorgan and BlueMountain are tight. Feldstein worked at JPMorgan for a decade before going it alone, and the bank is BlueMountain’s biggest broker. They entwined even more this week when BlueMountain hired James 'Jes' Staley, a 34-year JPMorgan veteran once considered a candidate to succeed Dimon. Staley will be a managing partner and buy a stake in the firm.
Staley is joining a lucrative enterprise. Feldstein’s $5.1bn flagship fund, BlueMountain Credit Alternatives, rose 13.3% through October, making it No. 51 in Bloomberg Markets’ annual ranking of the top 100 large hedge funds. Credit Alternatives was the 20th-most-profitable fund, producing $134.7m for BlueMountain. Since its inception in late 2003, the fund has returned an average of 10% a year.
Hit the link below to access the complete Bloomberg article:
image: © brydeb