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The Salient fund has been adding negative bets on REITs — shorting the securities.
Markets without the possibility of making these negative bets will be inefficient.
Despite all the bad news, those negative bets remain a very risky undertaking.
The insurer said that Mr. Ackman, a hedge fund manager, stood to benefit from negative bets on the stock.
Short-selling helps prevent bubbles from forming, but such negative bets cannot easily occur in the housing market.
But the volume of negative bets against the euro has mounted sharply in the last few weeks.
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Meanwhile, the negative betting continues.
In the third quarter of 2007, the investment bank reported publicly that it had made big profits on its negative bet on mortgages.
The bank said the negative bet was a merely a hedge against its exposure to the housing market.
SAC promptly sold a $700 million position in Elan and Wyeth and then made a big negative bet.
Farmer Mac, for example, on which the fund had made a negative bet, fell significantly after Gotham's report on it was made public last spring.
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