From Hero to Zero

Peloton Partners ABS hedge fund was one of the best performers in 2007,
returning a 87 % gain in that year.
That's like sky - high for a fixed-income fund.
They did this by shorting the junk-iest subprime securities,
while buying the AAA - rated ones.
No wonder they were lauded as "hedgie heroes" in no less than the Financial Times.

Three months later, they went bankrupt.
Wad happened was the AAA rated stuff just plunged in value
within a matter of weeks and they suffered
a barrage of margin calls.
Oops. That's what they call hero to zero.
One more example of how leverage can power you up, but can also kill you.

I tried to find the Financial Times article, but I think all copies
have been removed from the Internet.