Greek Hedge Fund Backs Local Opportunities

Jun 21 2012 | 11:02am ET

Even after the victory of pro-bailout parties in Greek elections this week, optimism about the country has been in short supply—especially among the hedge fund managers often blamed by Greeks for their sovereign debt woes.

But it's not in short supply at Natfilia Asset Management. The Athens-based hedge fund's Greek Opportunity Fund invests exclusively in Greek stocks.

"It takes time to convince, but when you show them the numbers and you really do not focus on the macro but the micro of individual companies, then people start to get excited," firm founder George Elliott told Bloomberg News. "At the same time we are extremely lonely. We are one of the few people out there feeling optimistic."

Elliott moved Natfilia from Dubai to his native Athens in 2010, the year Greece received its first bailout. The firm currently manages about US$400 million, and, in addition to the Greek fund, has shipping and nuclear energy funds.

Moving to Athens gave the firm, Elliott told Bloomberg, a leg up on the competition in researching local opportunities. And even a Greek exit from the euro—Elliott does not expect one—would offer opportunities, since the return of the drachma would allow investors to buy stocks even more cheaply.

"The whole premise behind the idea [of the fund] is that Greece has technically defaulted within a strong currency," Elliott said. "When Argentina defaulted, they had incredible returns on the stock market but incredible volatility on the currency as well, so it was pretty hard to start making allocations."

"If Greece remains in the euro, we think this is going to be an incredible investment opportunity from a risk-return perspective."

Natfilia has raised in excess of €50 million for the fund, which has a €250 million capacity, given the sorry state of Greek market capitalizations currently, since October.

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