NEW YORK (Bloomberg) - Hedge fund manager John Devaney, who had to sell his yacht and jet plane last year after wrong-way bets on mortgage securities, says it is time to buy bonds backed by sub-prime loans.

The CEO of United Capital Markets Holdings Inc., who lost more than 35 percent for at least one client last year and prevented investors from withdrawing their cash, says bonds derived from sub-prime mortgages are a bargain after falling as low as 10 cents on the dollar.

TCW Group Inc. and Pacific Investment Management Co. are also betting that prices will recover.

"Just because I lost money doesn't mean I will quit, no way," Mr. Devaney, who sold his boat "Positive Carry" and Gulfstream IV, said in a telephone interview from Key Biscayne, Florida.

"Prices have collapsed and this is the best opportunity I've seen in my career."

While the worst real estate market since 1981 caused demand for bonds backed by sub-prime mortgages and collateralised debt obligations (CDOs) to evaporate, 5,700 people are scheduled to attend the American Securitisation Forum annual conference in Las Vegas which started yesterday, said Katrina Cavalli, a spokeswoman for the organisation.

New York-based Bear Stearns Cos., whose hedge fund losses helped trigger the seizure in credit markets, and Calabasas, California-based Countrywide Financial Corp., the biggest US mortgage lender, are sending speakers and hosting events at the meeting, which is being held at the 4,000-room Venetian Hotel.

Countrywide, which agreed to be bought by Bank of America Corp. of Charlotte, North Carolina after losing as much as 89 percent of its market value, is throwing a party to coincide with the National Football League's Super Bowl championship.

Mr. Devaney, 38, paid for comedians Jay Leno and David Spade to perform in previous years.

This time, he is sponsoring dinner and a show by the Blue Man Group, a theatrical troupe that sprays paint on the audience and vomits fake food.

When delegates met a year ago, asset-backed bonds - debt created from pools of mortgages, credit-card bills and auto loans - were booming. Sales rose five-fold to $2.57 trillion in 2006 from $500 billion in 2000, according to industry newsletter Asset-Backed Alert.

By December, home foreclosures had almost doubled from the previous year, according to RealtyTrac Inc., an Irvine, California-based seller of foreclosure information.

The collapse of sub-prime mortgages contributed to more than $133 billion of losses and writedowns at the world's biggest banks in 2007, according to data compiled by Bloomberg.

Yields on three-year AAA debt backed by sub-prime loans rose last month to 2.75 percentage points more than benchmark rates from 0.15 percentage point a year earlier, according to Bank of America's securities unit.

Mr. Devaney's Horizon ABS offshore fund, which gained almost 40 percent in 2006, had to stop investors from taking money out during July amid losses, he said in a statement at the time. CompuCredit Corp., a lender to consumers with poor credit, lost 36 percent of the $70.5 million it invested with Mr. Devaney, according to a July regulatory filing by the Atlanta-based company.

Losses, mainly from mortgage bonds and CDOs, forced Mr. Devaney to sell his 142-foot (43 meter) yacht, the jet and real estate.

"We took a bad loss," Mr. Devaney said. "Selling the boats and planes helped reduce overhead and raised money to put back into the business."

No new US CDOs, which package loans and bonds into debt securities, have been issued this year.

Sales will tumble 65 percent in 2008 to $163 billion, according to reports from New York-based JPMorgan Chase & Co. Losses from sub-prime securities may exceed $265 billion as regional US banks, credit unions and overseas financial institutions write down the value of their holdings, Standard & Poor's said this week.

Prices will probably rebound after banks and investors finish writing down and selling the securities, said Mr. Devaney.

The New York Times, in an April article, said Mr. Devaney earned $250 million dealing in asset-backed bonds and distressed debt.

TCW in Los Angeles and Newport Beach, California-based Pimco, which manages the world's biggest bond fund, started funds last year to invest in distressed mortgage debt, betting that prices are cheap enough that they will make money even if defaults continue to rise.

Attendance at the annual conference will be about 17 percent lower than last year, said Ms. Cavalli, the spokeswoman. In contrast to 2007, when the gathering focused on growth, panel discussions this time will include sessions on restoring confidence as the value of securities tumble.

Among the scheduled presentations: "How are traders coping with decreased deal volume", "How do managers of various CDO structures react to adverse market conditions" and "What steps do investors believe are the highest priorities to rebuild confidence?"