Lahde Capital, a California-based hedge fund, has made more than 1,000 percent return this year by betting against subprime home loans, making it one of the world's best performing funds of all time. Andrew Lahde, the man behind the fund, noted that his returns had exceeded every estimate that he has ever offered any investor.

“We believe that all of these positions have further downside. However, the risk/return characteristics are far less attractive than they have been in the past. We do not plan on adding any positions at current levels. If the ABX indices were to bounce, we may short them again,” wrote Lahde in a letter to investors.

Lahde's portfolio consists primarily of short positions in AA down to BBB- holdings on the ABX index. The hedge fund plans to close out its positions in BBB- holdings within the next 90 days, only holding onto As and AAs, which will - according to the fund - take awhile to disintegrate but still may be worth nothing at all. Meanwhile, Lahde's new focus will be in a new fund that will short credit, as there is still plenty of bad credit to short!

In the end, this hedge fund's great performance can give us some insight into how much damage is left. Clearly, the scaling back of his position indicates that some of the mortgage problems may be coming to an end; however, there is still a lot of bad credit on the credit markets that may be worth shorting.