UPDATE: Here's the October 17 letter.
From FT Alphville:
Lahde Capital made one of the most successful hedge fund bets of all time in 2007, delivering a near 870% return, shorting subprime. Andrew Lahde’s full letter to investors is available after the jump.
By way of a few brief highlights:...
...We shorted the general obligations (via credit default swaps) of California, Florida, and Michigan - sort of an appetizer plate for the feast to come. We do not necessarily expect any of these states to file for bankruptcy. However, as their respective economies fall further into the toilet, we expect that the risk premiums for their debt will rise. This is how we make money.
We have a few more tricks up our sleeves with regards to shorting credit. We cannot share these with you at this time, as we have not yet executed trades in the latest space we are studying. Until we trade we would rather not tip off all the readers of this letter to our next great idea....MORE