Magnetar says it was “net long” on its own CDOs:
At the end of September, 2007, the majority of the notional value of Magnetar’s hedges referenced CDOs in which Magnetar had no long investment. The remaining hedges referenced debt tranches of CDOs in which Magnetar held a long equity position.
Notably, focusing solely on the group of CDOs in which Magnetar was the initial purchaser of the equity, Magnetar had a net long notional position. To put this into perspective, Magnetar would earn materially more money if these CDOs in aggregate performed well than if these CDOs performed poorly.”
ProPublica asked Magnetar to clarify whether the fund had been “net long” its own CDOs before the end of September 2007 or after as well as how it defined the term. Magnetar declined to respond.