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- Andrew Berger exited LMR Partners after losses from a mortgage-backed securities bet.
- The star portfolio manager’s strategy involved highly levered trades in residential MBS.
- LMR Partners faced a 0.9% loss in September, unique among major multistrategy funds.
Last year, Andrew Berger was riding high. The mortgage-trading team he oversaw at $12.8 billion hedge fund LMR Partners gained nearly $250 million in 2024, according to three people familiar with the matter.
Now, the star trader is out at LMR after sharp losses in September, tied to a mortgage-backed securities bet, those people said, asking not to be identified because the information is private.
That misstep contributed to a 0.9% loss in September for LMR, the only major multistrategy fund to lose money during the month. Such funds typically aim to deliver steady, low-volatility returns by spreading risk across a range of markets and strategies.
An LMR representative declined to comment. Berger did not respond to requests for comment.
Berger, who joined LMR in 2022 from Credit Suisse, was among the buzziest names in securitized-products trading this past year, following his standout 2024 performance and strong start to 2025, according to recruiters focused on the space.
He specialized in a capital-intensive, highly leveraged residential-MBS strategy that backfired last month, wiping out year-to-date gains estimated at more than $100 million, three people said.
It’s unclear what caused the trade to unravel. Mortgage rates — which don’t move in lockstep with US Treasury yields — initially dipped ahead of the Federal Reserve’s September 17 rate cut, then jumped sharply afterward.
Because a mortgage-backed security is composed of individual home loans, shifts in borrower behavior — such as refinancing or prepaying loans when rates change — can rapidly alter an MBS’s value. When those positions are leveraged, even modest rate moves can translate into outsized losses.
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