Vultures Move in on Subprime?

According to MoneyNews, that appears to be what is happening to the subprime secondary market.

The allure of rotting mortgage bonds has grown so strong that Wall Street's vultures have begun picking over their carcasses — a signal the credit crisis has entered a crucial stage in its vicious cycle.

In the past two months, these intrepid investors have begun betting billions of dollars on a hunch that mortgage security prices have fallen enough. It is a risk few have taken for a year or more as the credit crisis rooted in this very market wreaked havoc in financial markets around the world.

Long term readers are going to know this quote...

Where are the speculators, vultures and hedge funds? Where are the big money players willing to buy the exotic but still substantial mortgage-backed securities for which markets have ceased? The Fed's liquidity rush seems only to have convinced them the time is ripe for staying on the sidelines.

That is from a Wall Stree Journal article on the direction of the housing crisis. It makes a very important point about market dynamics after a bubble. The market has bottomed out and is ready for the move back up when so called "vultures" swoop in for what they see are bottomed out deals. Essentially, the article asked for what is happening today.

Now, if bottom feeders are moving in to buy the secondaries of sub prime mortgages then that, more than anything else, is a sign that the worst of the crisis is over. The article from Moneynews makes a similary point...

The behavior of Gundlach and those like him is important because this brand of investor — patient, value scavengers willing to stomach some initial loss in exchange for huge windfalls when a market turns — frequently signals that a market is forming a bottom when they are active.

What is missing from the article though is some good raw numbers. I am still unclear as to just how many bonds these so called vultures are buying and some context as to their place in their overall market. While this article paints a somewhat rosey picture on the future of the sub prime market, it is still unclear if these vultures are doing enough.