Passport Cuts Risky Short Bets Seeing No Shame in Losses
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For John Burbank’s Passport Capital LLC, shorting individual stocks has just become too hard.
The $3.9 billion hedge-fund firm, which rose 220 percent in 2007 by wagering on a bust in subprime mortgages, reached the conclusion after losing money in June on some of its bets, it said in a second-quarter letter to clients, a copy of which was obtained by Bloomberg News. Passport, which didn’t anticipate markets rising so strongly, listed a decline in liquidity, or the ease of buying and selling securities, as one of the reasons, along with Federal Reserve Chair Janet Yellen bolstering markets and an increase in merger activity.