JP Morgan Highbridge Housing Revival Portfolio

Chidem Kurdas

The recovery of construction from the slump has spawned a lot of long-term investments in building products and trades. JP Morgan’s hedge fund group, Highbridge, is one of the large managers playing this trend in various ways.

Last year we reported that Highbridge bought convertible bonds issued by Beazer Homes, a residential builder which also acquires and rents out previously owned homes.  The funds continue to hold the Beazer bonds.

In addition Highbridge favors the shares of construction input suppliers such as the paint maker Sherwin-Williams and Freeport-McMoRan Copper and Gold Inc, whose copper products are in greater demand as building activity grows.

Others with construction bets include Cerberus chief Stephen Feinberg, looking to acquire more of BlueLinx Holdings, a building products distributor that he owns more than half.  He wanted to buy the rest in 2010 but ran into shareholder unwillingness.

Then there is John Paulson’s stake in NovaCopper—copper seems to have become the new gold for him. Even his gold fund holds NovaCopper.

Today the US Commerce Department announced that home building rose in December so that 2012 ended with the most new homes started since 2008. But starts are still below pre-slump levels, suggesting there is more upside to such investments.

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