By Neil O’Hara
For most investors in the asset-backed securities market, the financial crisis overturned assumptions about credit quality, liquidity and the probability of default. To Tom Capasse and Jack Ross, the founders of Waterfall Asset Management, it was simply a throwback to the early days of the securitization business. Then, as young investment bankers, the two men pushed the ABS concept into esoteric new collateral classes through private placements bought by insurance companies.
|Jack Ross: “We don’t focus on the ratings”|
Over the years an increasing proportion of ABS deals became publicly traded, and by 2007 private placements had given way to a multitrillion-dollar securitization market. When the markets seized up in 2008, the ABS market had to be invented all over again, with new deals being structured as private placements and sold to only the savviest investors, such as hedge funds, instead of being publicly...