Thames River hedge fund manager goes long subprime

By Laurence Fletcher

LONDON (Reuters) - Thames River fund manager Ken Kinsey-Quick has moved long some battered subprime assets after shorting the sector last year, because he thinks they are cheap, and also hopes to make money out of a fall in commodity prices.

Kinsey-Quick, who runs around $2.3 billion (1.2 billion pounds) in fund of hedge funds and who made money last year by having up to half of his assets in funds that were short subprime as the U.S. mortgage crisis unfolded, said he had invested at the start of this month in a fund specially set up by one fund manager.

Shorting means betting on a lower price for a security in the future.

"Everybody hates the word subprime. You bring it up and it's a dirty word, nobody wants to discuss it," Kinsey-Quick said in an interview late on Wednesday. "Everybody's just dumped it.

"You can get a high IRR (internal rate of return) out of these things by buying up some of these pools."

Prices are now too low relative to expected default rates, he said.

Since the U.S. subprime crisis began last summer, many subprime-related securities assets have plunged in value, some to less than 10 cents in the dollar, as investors worried about rising defaults and the ratings assigned to some securities.

Kinsey-Quick said he had allocated 1-1.5 percent of assets to the fund, which he declined to name as it was not fully invested yet, and which draws down cash from Thames River as it finds opportunities in this area.