By Irwin Speizer
When Brett Jefferson was scouting for opportunities in structured credit for his newly launched hedge fund, Hildene Capital Management, he happened across a somewhat obscure debt instrument issued by banks and insurance companies. Called a trust preferred security, or TruPS, it often came bundled into collateralized debt obligations. No one seemed to know much about what was inside these TruPS CDOs, and they were trading at a steep discount as the banking system started its collapse in 2008.
Brett Jefferson: I spent a long time trying to figure out mortgages. But after a few months, I decided I don’t know how anyone could figure out what is in there
(Photographs by Michael Edwards)
“What made this product so interesting is, first, that it had never traded in a distressed environment,” Jefferson says. “It had never traded down.”