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Subprime Bonds Come Roaring Back

No doubt about it. Subprime is back. Mortgage-backed securities are hot again.

Many of the hedge fund traders gathered at the Skybridge Alternatives investor summit (SALT) at the Bellagio Hotel in Las Vegas are enthusiastically seeking out the once "toxic" mortgage bonds for their portfolios.

Even Kyle Bass, the Texan hedge fund manager who made billions shorting mortgage bonds in the years before the financial crisis, is bullish on mortgage credit.

The "worst" bonds, those not backed by Fannie Mae and Freddie Mac, could see gains of 15 percent, he said.

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