Hedge Fund Reveals Five Percent IndyMac Stake

September 24, 2007 No Comments »

In a U.S. Securities and Exchange Commission report filed Friday, New York-based hedge firm Second Curve Capital LLC revealed it held a five percent stake in IndyMac Bancorp.

According to the filing, Second Curve controls 3.69 million IndyMac shares valued at roughly $86.3 million.

Former banking analyst Thomas Brown, who runs the $500 million hedge fund, said he was hurt by subprime bets made earlier this year.

Former investments included a stake in Accredited Home Lenders, who halted nearly all lending last week, along with now defunct New Century Financial Corp.

Let’s hope this isn’t an ongoing trend…

It shouldn’t be, as IndyMac recently made a series of changes to mitigate risk, including a reduction in Alt-A loan exposure, along with a shift to government-backed loans.

Earlier this month, the lender predicted that a whopping 84% of its loan production in the fourth quarter would be conforming and insurable by the FHA.

Second Curve looks to benefit from the lender’s perceived sense of safety despite their probable dip in profits, and likely hope this mortgage play works out better than past, similar investments.

Pasadena, California-based IndyMac is the second-largest publicly traded independent mortgage lender.

Shares of IndyMac were trading down roughly 5% to $22.14 a share in midday trading, well below their 52-week high of $48.14.

Last month Bank of America invested $2 billion into Countrywide, easing liquidity pressures that were wearing down the nation’s number one mortgage lender.

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