Bullish on America

After making much of its fortune by predicting that the US subprime mortgage market would fall apart in 2007 or 2008, the Whitebox Multi-Strategy fund has gotten to like the country more and more. Investors are too pessimistic about American politics, its economy, and the 'fiscal cliff,' says Jason Cross, a portfolio manager who also serves as the parent firm's (also called Whitebox) head of global equity. Another financial crisis is unlikely. They don't see that. The market is misguided. In 2008 the financial companies were the ground zero of problems; today it is Europe and China that are the epicenters for the next crisis, says Cross. Whitebox gained attention for its seemingly daring bets against mortgage-backed securities by buying credit-default swaps. While the bond market several years ago was forecasting defaults as bad as during the Great Depression, today is a little different, says Cross.