question on CDO's

i hear about hedge funds shorting CDO's, how is that actually done?
thanks guys

 

Through a broker most probably, like everyone else. A Hedge Fund is nothing more than an entity (Partnership, Corporate, Trust, etc) managing a pool of money. This "entity", like anyone else (you and I are also entities, i.e. "individuals"), has to have a bank account for trading and have to trade through brokers (most of the time).

Unless you are asking for something else, I hope this helps.

 

I imagine they are shorting the ABX via bond desks.

http://www.creditmag.com/public/showPage.html?page=323419

 

One way would be to buy protection (credit default swaps) against the CDO.

 

Here is a primer on a typical transaction.