Ellington’s Vranos Bets on ‘90s Trades That Brought Him Fame (1)

The Federal Reserve’s flurry of interest rate hikes is recreating the market conditions that helped mortgage investor Michael Vranos make his fortune in the early 1990s. Now, he is betting the same trades will help him win again.

The Fed’s current rate tightening cycle is reminiscent of the central bank’s actions nearly thirty years ago, when it raised rates by 300 basis points to 6%. This created the opportunities that allowed Vranos to set up a hedge fund now known as Ellington Management Group, named after his Connecticut hometown, betting on mortgage bonds.

“At that time, the Fed rate ...