(Bloomberg News) Andrew Feldstein, who bet against JPMorgan Chase & Co. before helping the bank unwind more than $20 billion of trades, has emerged as one of the biggest winners among hedge-fund managers profiting from a flawed strategy.

The $4.3 billion flagship fund of Feldstein's BlueMountain Capital Management LLC returned 9.5 percent this year through June 22, according to a person familiar with the data. That's up from the 5.4 percent return before JPMorgan announced a $2 billion loss by one of its traders known as the London Whale. BlueMountain, which was on the other side of those wagers, stands to make as much as $300 million, said market participants familiar with the trades.

Feldstein, a former JPMorgan executive who helped the company create the credit-derivatives market, profited by exploiting price distortions caused by the outsized bets and then aiding the bank in unwinding the trades as it sought to cap the loss, according to four people with knowledge of the strategy who asked not to be identified because the matter is private. BlueMountain enabled JPMorgan to unload more than $20 billion of bets on a credit-swaps index, two of the people said.

"Andrew Feldstein is one of the most creative and sophisticated investors in fixed income," said Sarah Quinlan, founder of hedge-fund advisory firm QAM in New York and a former BlueMountain investor. "It is not surprising that JPMorgan would reach out to him to assist in the unraveling of this complicated and very public situation."

Helping JPMorgan

By assisting JPMorgan in unwinding its trades, Feldstein, 47, enabled the bank to take losses in the second quarter and move ahead with less uncertainty, said Adrian Miller, director of global markets strategy at GMP Securities LLC in New York. BlueMountain also helped JPMorgan Chief Executive Officer Jamie Dimon put behind him a trading debacle that brought scrutiny from Congress and regulators and tarnished his reputation as one of the industry's best risk managers.

Dimon "will be judged by how this problem is rectified," Miller said.

Feldstein's profit from betting against JPMorgan probably exceeds that of Boaz Weinstein, the Saba Capital Management LP founder who gained media attention for recommending the trade at a February hedge-fund conference in New York. His main fund, with $5 billion in assets, is up 2.3 percent this year as of June 22, according to a person familiar with Saba's returns.

Doug Hesney, a spokesman for BlueMountain, declined to comment, as did Kristin Lemkau of JPMorgan.

Obama Basketball

JPMorgan hired Feldstein, a graduate of Georgetown University and Harvard Law School, in 1992, as it was developing a new market that allowed banks to pay investors to take on the risk that companies default on their debt. Those financial instruments, known as credit-default swaps, evolved into a market with more than $62 trillion of outstanding contracts at its peak in 2007.

A former Harvard Law classmate of Barack Obama's who played pickup basketball with the future U.S. president, Feldstein has kept a low profile outside financial markets, rarely giving interviews. He lives in Scarsdale, New York, in a home he and his wife purchased for $4.6 million in 2006, according to real estate records, and contributed to both Obama and Republican candidate John McCain in 2007. In her 2009 book "Fool's Gold," about JPMorgan's creation of the credit-swaps market, Gillian Tett described him as introverted and "exceedingly bright."

'No Ego'

"He's a very modest individual," said William S. Demchak, president of Pittsburgh-based regional lender PNC Financial Services Group Inc., who hired Feldstein at JPMorgan. "The reason he doesn't talk publicly is he has no ego. He's not a master of the universe and wanting to make big bets and be a hero. He comes to work every day and tries to, with his team, earn a sensible return on the money they're investing."