Cheyne Capital, the UK hedge fund manager which has already put one of its funds into administration, has said it could encourage mortgage originators it feels have misrepresented loans when selling them to a second fund to buy them back, in an attempt to mitigate losses to the portfolio.
The plans, which related to Cheyne's listed hedge fund Queen's Walk Investment, were revealed as the fund posted a â¬17.1m ($26.3m) loss on its portfolio for the quarter ending on March 31 2008. The fund's managers wrote down â¬22.1m of investments, largely in the asset-backed securities markets.
