If the trade of the year in 2007 was to short the ABX, the subprime mortgage index, along with subprime lenders and subprime mortgages themselves, then the question hedge fund managers and their investors are now asking is: What happens next? And, more pressing, what’s the best way to profit from the massive dislocation in the mortgage markets?
“It is a trillion-dollar opportunity,” says Michael Hennessy, managing director of $1.2
