Sun, Apr 30, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Dromeus Capital ‘s Greece focused hedge fund up 40% in 2012

Friday, January 18, 2013
Opalesque Industry Update - A new Greece focused hedge fund, launched in October 2012 by Dromeus Capital Group, finished 2012 up 40.3% as the Greek debt buyback and improving market sentiment towards Greece drove returns.

Dromeus, the Emerging Markets alternative investment specialist, says that the consensus that Greece would have to exit the Euro has turned almost 180 degrees to an acceptance that a Grexit is off the cards.

Achilles Risvas, CEO, of Dromeus says: “Although the last quarter has seen a profound upwards rerating of Greek bonds we are strong believers that further positive repricing of Greek fixed-income and selected shares is still to come. But, while we have got off to a very strong start, we don’t expect the longer term revaluation of Greek assets to be all plain sailing.”

“Investors who want to benefit from the rerating of Greece, and the excellent value opportunities that exist there, will still have to be prepared for periods of volatility ahead.”

The buyback of Greek Government Bonds will reduce Greek debt from 144% of GDP to 124% of GDP by 2020 and will see Greek interest payments fall from 3.5% of GDP to 2% of GDP per year.

Dromeus, who had been long term bears of the Greek markets, established the fund after deciding that investors had taken an too extreme a view of the Greek economy and that selected assets had become heavily oversold.

The Dromeus Greek Advantage Fund now has 95% of its fund invested in Greek fixed-income, asset-backed securities and equities.

Adds Achilles Risvas: “Whilst the bond buyback does not mean that Greece has found a path to debt sustainability, the country’s immediate liquidity problems have been tackled. The funding gap through to 2016 is now largely dealt with.”

Achilles Risvas says that the Greek buyback process has seen further valuable commitments made by key players, such as German chancellor, Angela Merkel, to keep Greece in the Euro.

Greek equities

Whilst Greek Government Bonds have rallied, the performance of Greek equities has been weaker over the last two months, says Dromeus.

Explains Achilles Risvas: “With 10 year Greek bond yields of around 11% means the average 2.3% yield on Greek equities does not look too generous to us. However, there are opportunities to invest in selected companies with exceptional track records, visible cash generation, and fully funded business plans that trade on average below 5x EV/EBITDA and 8x earnings.”

“Despite the collapse in the Greek economy a good number of Greek corporates have defended their profitability and managed their balance sheets and earnings generating capacity comparatively well.”

Although the banks have seen substantial recent falls in their share prices, Dromeus still remains negative on the sector.

Dromeus says that plans for recapitalising the banks, which were announced recently, are likely to be too dilutive of existing shareholders. Future profits for the next five years for banks will largely be used to maintain regulatory capital. Dromeus believes this will leave limited value for existing shareholders.

Political developments

Despite the vote, in early November, for an aggressive fiscal adjustment programme, Dromeus expects that political developments will continue to create volatility in the Greek markets.

Adds Achilles: “The government’s mandate is fragile enough for 2013 to bring its share of political crises. Whilst mainstream politicians have begun to understand the need for change, the reform programme is not progressing as fast as it could. For example, privatization of state owned assets remains slow.”

Press release

www.dromeuscapital.com

Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: Ex-Man manager combines sustainable investing with AI/ML[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Dr. Richard Bateson, quant fund manager and physicist, has recently

  2. Other Voices: "Winner-take-all" dynamics and hedge fund investing[more]

    A growing stream of thinking in microeconomics is the concept of "winner-take-all" dynamics. The idea seems simple. A combination of networking economics and classic economies of scale creates situations where there are just a few dominant firms or economic agents who are able to capture significant

  3. Investing - How Chipotle's comeback attracted big data robots and value investors alike[more]

    From Forbes.com: When William Ackman's ailing hedge fund Pershing Square Capital Management bet $1 billion on shares in Chipotle Mexican Grill beginning in July 2016, the stakes couldn't have been higher. Pershing Square was reeling from what would eventually be a near $4 billion loss in drugmaker V

  4. Gondor Capital sees challenges ahead for financial markets as two hedge funds post strong gains in Q1[more]

    Komfie Manalo, Opalesque Asia: Vincent Au, portfolio manager of New York-based hedge fund firm Gondor Capital Management believes that the remaining of the year would be challenging for the financial markets even as his two hedge funds maintain

  5. Service Providers - Colemore launches fee tracking service for limited partners[more]

    Following Colmore's successful launch in January 2017, the firm has announced the launch of FAIR.. FAIR is designed to help private equity investors independently validate fees and incentives charged by underlying managers, saving time and providing an extra level of comfort. There is a glob