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

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

The Life Settlement: Yield For The Investor And Cash For The Consumer

Mar 31 2015 | 6:48am ET

Investors are languishing in a yield-starved, low-interest rate environment, looking...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note