Some money managers are looking beyond the real estate business for opportunities tied to the recent plunge of subprime lending stocks.

Mortgage companies such as Accredited Home ( LEND), Fremont General ( FMT) and NovaStar ( NFI) have become some of the most heavily traded names on Wall Street since problems have emerged in the business of lending to homebuyers with weak credit histories.

Shares in the sector were hammered when lenders ranging from HSBC ( HBC) to New Century ( NEWC) admitted that recent loans were going bad at a rapid clip. Selling fed what one mortgage company called an "irrational panic" in the business of selling mortgages as securities, though recently fears have subsided somewhat as big investors said they would be bottom-fishing.

The steep selloff in the sector has some institutional managers trying to benefit from others' losses. But many others say they still see value in the sector.

Orlando, Fla.-based Beacon Hill Financial, which serves as an adviser to financial planners to the wealthy, says it is eyeing investments in companies it believes will benefit from the shrinking pool of mortgage lenders, says Jon White, principal.

He points to major banks that have taken a dip because of their link to subprime lending businesses. Those include Citigroup ( C) and HSBC, which own subprime lending outfits.

"Right now we're looking at financial firms for when they hit the bottom," White says. "Let the market overreact and we can take a couple of names."

On Beacon's radar are companies that might have taken a residual beating from the subprime sludge but should escape unscathed over the long haul.

White says he also will be on the lookout for any dips in Lowe's ( LOW) and Home Depot ( HD). The firm already has made an initial investment in Home Depot.

"These are companies that have been hurt ... but will be net advancers," he notes.

At the other end of the spectrum is Anton Schutz, president of Mendon Capital Advisors and portfolio manager to the ( BURKX) Burnham Financial Services and the ( BURFX) Burnham Financial Industries funds. He believes companies across the financial sector will continue to be hit by exposure to the subprime mess.

"It was pretty obvious to me that this was going to end badly at some point," says Schutz.

While neither of his funds has any direct investments in the subprime lenders, Schutz is concerned about the general risk that the investment banks have been taking on. The slide in the subprime sector prompted Schutz to short several of the large brokerage firms a few weeks ago. He says he still has some put positions out -- options-based bets that shares will fall -- but would not reveal specifics.

During earnings calls last week, Goldman Sachs ( GS), Lehman ( LEH) and Bear Stearns ( BSC) said it's possible they could purchase mortgage portfolios, teams of lenders or whole companies from subprime lenders.

Taking a similar view is hedge fund Magnetar, which was founded by former executives at Citadel Investment Group and Glenwood Capital Investments. It is said to have raised some $500 million for a long/short mortgage fund to plow into derivatives and other structured securities tied to subprime, according to industry newsletter Derivatives Week.

David Snyderman, head of global fixed income at Magnetar, directed calls to a spokesman who declined to comment on the firm's activities.

And Magnetar isn't the only shop scouring for value in subprime. Brigadier Capital Management -- an asset management arm of financial services firm Cohen & Co. -- is on the prowl, according to Ralph Nacey, chief investment officer at Brigadier.

Nacey says Cohen launched Brigadier nearly six months ago, anticipating subprime carnage.

"We thought there'd be opportunities," he says. "I don't think anyone could have predicted the speed at which things unfolded."

Brigadier raised some $120 million for investments back in November and could raise another $80 million shortly. Nacey declined to discuss specifics about the fund, including returns.

Rich Gates, portfolio manager in West Chester, Pa., at TFS Market Neutral Fund, began shorting Novastar in January, when the stock was trading in the $26 range. The mutual fund is a quantitative investment fund that employs some hedge fund savvy to make its bets.

Gates says the fund, which factors analyst downgrades and short-selling interest, rode Nova down to $4 before cashing out. Shares recently fetched $6.20.

Gates declines to discuss returns but says, "From our standpoint, we've made our money and we're moving on."

Meanwhile, Beacon Hill's White also says he went with his gut rather than a computer model when he jettisoned securities that might be tied to subprime.

"Too few banks were chasing good borrowers, and that had to end sometime," White says.

Few had such foresight. Caliber Global Investment Management Group, a mortgage investment fund listed on the London Stock Exchange, saw its shares lose a quarter of their value over six weeks.