Bear Stearns is Long Gone, But a Bond it Originated is Making Some Investors Rich

Bear Stearns may be long gone, but a residential mortgage-backed bond it originated before the housing crisis is still paying off, said Garrett Tripp, portfolio manager for the Braddock Multi-Strategy Income Fund. According to Tripp, the bond, which has a loss adjusted yield to maturity near 6%, has limited downside risk as newly troubled borrowers are usually offered a loan modification. If the housing market continues to demonstrate strength over the next few years, this bond could yield 8% in his view. Staying in the mortgage-backed world, Tripp is also bullish on a Freddie Mac Structured Agency Credit Risk Debt Note. If credit continues to perform, Braddock believes this single B-rated bond could return up to 7% over the holding period.