So Greece is going to default today. Sorry, I mean find itself in arrears. Anyway, long before this momentous day, people clung to the quaint certainty that everyone would act like adults and the Greeks wouldn’t elect a half-communist government and its creditors wouldn’t roll the dice and put 66 years of European integration at risk to spite it. And among those people were hedge fund managers. Notably, Dan Loeb of Third Point, who launched a Greek fund and bought up all sorts of Greek stuff, including banks (yikes) and, just a few months ago, a fifth of a Greek insurance company (eek!).
Unlike lots of other people, Danny Boy seems to have considered the possibility that Alexis Tsipras & co. actually meant what they said back when they took power back in January, and he didn’t like the implications of those possibilities. So he picked up his toys and went home.
Loeb, whose Third Point hedge fund earned $500 million betting on Greek debt in 2012 — and was so bullish on the tiny nation in 2013 that he opened a separate “Hellenic recovery fund” — has pulled nearly all his assets out of the country, The Post has learned.
Loeb’s $17.5 billion fund sold all of its Greek bonds and public equities months ago, fearing the country could face a “liquidity” crisis after electing leftist Prime Minister Alexis Tsipras, according to an investor in Third Point.
So, Third Point people: Breathe a sigh of relief. As for the rest of you? Dust off those battered old certainties that someone will eventually do the mature thing before everything goes completely to hell and raise them high. They’re all you’ve got left.
Leon Cooperman, who runs Omega Advisors, said Monday it’s hard to imagine that Greece would become a major event for the markets, as he put the chances of the country quitting the euro at less than 50 percent. Greylock Capital Management, an emerging-market firm that owns Greek debt, said people will probably vote for the austerity measures in the July 5 referendum, called on Saturday by Prime Minister Alexis Tsipras….
“It’s hard for me to imagine that this will be a major event for global markets,” Cooperman said in an interview with Bloomberg TV’s Betty Liu.
It seems hedge fund managers and, frankly, everyone else don’t think that it’s such a big deal that a country of minor importance is on the verge of economic collapse. And maybe it isn’t. Or maybe it just isn’t for them because they’ve lost their taste for the game.
The hedge funds and other investors who were betting on an unraveling of Europe because of the Greek crisis have lost a lot of money since 2012, as interventions by the E.C.B. ensured that bets against Spanish or Portuguese or Italian debt went unrewarded. Indeed, combined with activism by the Federal Reserve and other central banks, anyone who went “short” on global markets, betting on declines of stocks and other risky assets, has lost money for most of the last three years.
So just maybe the entities that would normally be betting that a Greek crisis would spiral into something more dangerous on Monday were out of the game, either gun-shy after the last few years or broke.
Hedgie shrewdly pulled assets from Greece ahead of crisis [N.Y. Post]
Hedge Funds Are Wagering Greeks Will Vote Yes in Sunday’s Referendum [Bloomberg]
Why Aren’t the Markets Freaking Out More About the Greek Crisis [NYT TheUpshot blog]