Adelante Sees Short-Term Profit On Greek Debt

Jul 3 2012 | 10:44am ET

One hedge fund betting on Greek bonds is expecting a big return in the short run.

While other hedge funds are making long-term plays on Greece, Adelante Asset Management is interested in the short term. And, over that short-term, it expects to turn a 35% profit on its investment, boosted by a debt restructuring agreement.

London-based Adelante bought a basket of Greek debt for about 12..5 cents on the dollar, prior to this month's elections. That poll produced a conservative government that has pledged to renegotiate Greece's tough bailout terms, and that will be good for Adelante, CEO Julian Adams said.

"We think they will cut a deal in the short term," he told Reuters. "It's a tactical position. As the bonds appreciate, we'll take profits."

And Adams expects the bonds to appreciate to about 16 cents or 17 cents, making Adelante a roughly 35% return. Adelante invested about 2% of its assets in the Greek debt basket, which is already worth about 14 cents on the dollar.

"Fourteen cents is way below recovery value in any emerging market debt scenario," Adams said.

"After the Argentinian debt default, bonds initially traded at 30 cents, though they drifted," he said. "Once they were restructured, the recovery rate was 45 cents on the dollar. Ecuador did a buyback at 35 cents on the dollar."

In Depth

The Importance of Stability in the Evolving Hedge Fund Administration Market

Oct 5 2015 | 8:17pm ET

Hedge fund administration has evolved from simple record keeping to an integral,...


Citadel's Griffin Reaches Settlement in Contentious Divorce

Oct 8 2015 | 10:14pm ET

Billionaire hedge fund manager Ken Griffin and his wife have settled a long-running...

Guest Contributor

Hedge Fund Marketing To Independent RIA Firms

Sep 30 2015 | 1:56pm ET

In this contributed article, Bruce Frumerman of Frumerman & Nemeth Inc. explains...


Editor's Note