Hedge fund manager Kass cuts back on positions 09/15 01:26 PM
BOSTON, Sept 15 (Reuters) - Hedge fund manager Douglas Kass, who won big by betting against ailing mortgage finance companies Fannie Mae (FNM:$0.6299,$-0.1101,-14.88%) and Freddie Mac (FRE:$0.4090,$-0.0510,-11.09%) in recent months, said he has cut back on his positions.
"It is a dangerous time for the longs and for the shorts," said Kass, who heads hedge fund Seabreeze Partners Management.
"This is a time to watch and not a time to play," he told Reuters just hours after Wall Street's landscape was dramatically reshaped as Lehman Brothers Holdings Inc (LEH:$0.2227,$-3.4273,-93.90%) filed for bankruptcy and Merrill Lynch & Co Inc (MER:$19.58,00$2.53,0014.84%) agreed to a takeover by Bank of America (BAC:$27.13,00$-6.61,00-19.59%) .
Kass said he has cut back positions throughout his portfolio, declining to be more specific. A week ago he said he was still short Fannie and Freddie.
"It is time to move into cash," said Kass, one of just a handful of hedge fund managers who speak about short positions.
Kass, who makes money for his investors by betting against the future of certain companies through short selling, would not discuss his fund's performance, but someone familiar with returns said Kass was up roughly 25 percent at the start of last week.
That stands in sharp contrast to the average hedge fund, which has lost about 5 percent this year, according to data from Hedge Fund Research.
Financial shares are off 32 percent this year, as measured by the 66-share Standard & Poor's Financial Index <.GSPF>.
Thanks to his savvy call on Fannie and Freddie, Kass is being called an industry icon whose name is linked with a company's downfall the way hedge fund manager Jim Chanos is linked with Enron, for example. (Reporting by Svea Herbst-Bayliss; editing by John Wallace)
