Hedge fund manager Lee Robinson notched a 900% gain during the global financial crisis by turning a $20 million position into $200 million with timely bets against the US subprime mortgage sector.
Today, he sees a new opportunity as risks bubble up around private credit. But instead of betting directly against the sector, he’s focused on potential second-order effects and is shorting some of the $1.8 trillion market’s biggest backers: insurers.
Robinson is ramping up bearish wagers on firms from Lincoln National Corp. to MetLife Inc and even Berkshire Hathaway through the use of credit default swaps, derivative contracts designed to protect investors against a default. His firm, Altana, is launching a new fund, into which it is also investing its own capital, to protect against what he sees as an inevitable downturn in private credit, a cooling-off in AI hype, and the impact of declining liquidity on corporate valuations…
Robinson for his part is spreading his bets within his new fund, investing in single-stock equity options in addition to insurance CDS. Robinson, who previously worked for hedge fund billionaire Paul Tudor Jones, has a track record with opportunistic and distressed debt wagers…
All it would take now, Robinson says, is one stressed insurer — “any single blow-up” — to cause ripples throughout the industry.