Subprime Fallout Brings Bargain Hunters

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As fallout spreads from soaring defaults on riskier home-mortgage loans, some big investors see a recovery coming and are preparing to increase their bets on the so-called subprime market, the Wall Street Journal reports.


Others already have reaped big gains wagering against it.


Yesterday, shares of one of the biggest subprime lenders, New Century Financial Corp., plunged 69% on the New York Stock Exchange in the wake of Friday’s disclosures that the company can’t quantify losses for 2006 and that federal authorities are investigating stock trading ahead of its recent reports of accounting problems. Fremont General Corp., another big subprime lender, shut down its subprime business over the weekend; its stock fell 32% on the NYSE. In all, more than two dozen subprime lenders have been forced to close in recent months.


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