British hedge fund invests in WaMu and Sovereign

By Jonathan Stempel

NEW YORK (Reuters) - An activist British hedge fund has taken a 6 percent stake in Washington Mutual WM.N as the largest U.S. savings and loan tries to rebound from billions of dollars of mortgage-related losses.

The London-based fund, Toscafund Asset Management, also reported a 5.1 percent stake in Sovereign Bancorp SOV.N, the second-largest U.S. thrift.

Toscafund revealed the passive stakes in separate filings Thursday with the U.S. Securities and Exchange Commission.

Shares of both Washington Mutual and Sovereign have lost more than half their value in the last year.

Toscafund revealed its stake in Seattle-based Washington Mutual more than three months after that thrift set plans to raise $7.2 billion (3.6 billion pounds) of dilutive capital from outside investors led by private equity firm TPG.

The fund's 105.5 million share stake in Washington Mutual makes it the thrift's second-largest shareholder after TPG, according to Thomson ShareWatch and public filings.

On July 22, Washington Mutual posted a $3.33 billion quarterly loss, and said losses through 2011 in its one-family residential mortgage portfolio would probably be toward the high end of its prior forecast of $12 billion to $19 billion.

Toscafund in March offered to help Washington Mutual recapitalize, The Wall Street Journal said at the time.