JPMorgan's "whale" problem lures hedge-fund sharks

Tue Aug 14, 2012 8:58pm EDT
 
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By Svea Herbst-Bayliss

BOSTON (Reuters) - JP Morgan Chase's (JPM.N: Quote) "London whale" problem attracted some hedge-fund sharks in the second quarter.

New regulatory filings show that several big hedge-fund players loaded up on JPMorgan even as heavy losses on a soured credit derivative bet made by a trader known as the "London whale" sent the bank's stock reeling.

It seems as though managers such as Jim Chanos, John Paulson and Jamie Dinan saw the stock's 22 percent drop in the second quarter as a buying opportunity.

For much of the quarter, the JP Morgan story riveted the financial world after the bank, long acclaimed for navigating crises better than its peers, got tripped up by a bad bet that could cost it at least $6 billion.

Andrew Feldstein's BlueMountain Capital, which won big by taking the other side of the JPMorgan credit bet, nearly tripled its holdings of the bank's stock to 233,505 shares, according to a filing Tuesday with the Securities and Exchange Commission.

Similarly, James Chanos, whose Kynikos Associates is traditionally a short player that bets stocks will fall, raised his holdings in the bank to 323,400 shares from 91,6000 shares.

Hedge fund manager Jamie Dinan, who runs York Capital and whose name sounds eerily like that of JPMorgan boss Jamie Dimon, took a stake of 2.8 million shares in addition to having an option to buy another 1 million shares.

And John Paulson, whose major bet on Bank of America contributed to his firm's embarrassingly large losses last year, placed more chips on the banking sector with a new 4 million- share stake in JPMorgan.   Continued...

 
JPMorgan Chase & Co's international headquarters are seen on Park Avenue in New York July 13, 2012. REUTERS/Andrew Burton