Hedge fund bond star Greg Lippmann readies next big bet on commercial-property debt shunned by others

Commercial Real Estate Market Overview - Greg Lippmann, a key figure in "The Big Short," is preparing for a significant trade in commercial mortgage bonds, seeing opportunity in the distressed commercial real estate debt market [1] - Commercial real estate faces challenges with property prices slumping, most office buildings in trouble, and a large amount of debt coming due at higher interest rates [2] - The Federal Reserve's potential pivot to rate cuts has spurred optimism in financial markets, with U S stocks returning to record territory [4] Investment Strategy and Opportunities - LibreMax Capital, founded by Lippmann, is focusing on mispriced securities backed by pools of loans on different property types, rather than single trophy buildings [5] - The firm is betting on cherry-picking bonds at bargain prices that produce less dire outcomes than anticipated, using risk models and data analysis [4] - Older investment-grade BBB rated conduit bonds saw price talk of $42 to $65, with potential for full face value repayment at maturity [5] Market Dynamics and Investor Interest - New bond supply in the commercial mortgage-backed securities (CMBS) sector has been sparse since the Fed raised rates to a 22-year high [6] - Despite steep discounts on BBB and lower-rated securities, newly issued CMBS in January met strong investor demand [6] - DoubleLine Capital, with $95 billion in assets under management, is also exploring opportunities in the CMBS market, launching a new ETF focused on higher-rated bonds [7][8] Long-term Outlook - Lippmann views the current market conditions as a multiyear opportunity, with commercial real estate prices having declined but the opportunity persisting [8] - The firm sees potential for higher recoveries in some commercial mortgage-backed securities than current prices reflect, similar to past strategies with subprime and student loan bonds [3]