Dromeus Capital Management SA was founded by Achilles Risvas and Jason Manolopoulos in October 2012. The $240 million hedge fund and its Dromeus Greek Advantage Fund was explicitly marketed as a wager on Greece’s recovery, and it has indeed flourished along with economy of the Mediterranean island nation over the last 20 months.
Greece was effectively bankrupt in 2008, and the country required a massive international bailout to stabilize its finances. The government was also forced to implement extreme austerity measures, including reducing salaries and pensions and eliminating hundreds of thousands of government jobs. There were huge public anti-austerity protests and the pro-bailout government just barely gained an electoral majority in two very hotly contested elections.
Fast forward to 2014, and Greece, while still operating on a financial lifeline, is showing clear signs of economic life, including in the financial markets.
Dromeus Greek Advantage Fund
A recent article by Kelly Bit in Bloomberg Briefs highlighted the outstanding performance of newcomers Dromeus Capital Management. The Dromeus Greek Advantage Fund was up by a scintillating 26% this year as of the end of June, according to Bloomberg News. The Greece-focused fund is up a whopping 160% since inception, relative to less than 10% for the average hedge fund during that time span.
Risvas and Manolopoulos (author of “Greece’s ‘Odious’ Debt”) timing was perfect. By the end of 2012, the Greek government had convinced international creditors it would implement the required budget cuts and ended speculation that Greece would exit the euro. other major investors also began to see the potential in Greece. Dan Loeb’s Third Point LLC launched a Greece-focused fund in April 2013 and John Paulson began taking significant stakes in Greek banks Alpha Bank A.E. (ADR) (OTCMKTS:ALBKY) (FRA:ACB) and Piraeus Bank SA (OTCMKTS:BPIRY) (FRA:BKP1) a few months later. Knowledgeable sources say Third Point’s Greece fund is up 12% year to date and 34% since inception 15 months ago. As ValueWalk exclusively reported, Seth Klarman’s Baupost Group is buying Greek warrants. Additionally, famous value investor, Prem Watsa, is buying Greece, as is David Einhorn.
Greece: Eurobank Egasias SA recapitalization
Dromeus enkoyed a handsome profit from its from its recent participation in the recapitalization of Greek bank Eurobank Ergasias EO-,30 (FRA:EFGC), as outlined in a letter to investors released earlier this month. The bank sold shares in April to plug a capital shortfall. “The recapitalization will create significant value for shareholders,” Dromeus explained in the letter. “Whilst the Eurobank shares finished the quarter up 19% from the placing price they remain a core holding for the fund as we believe there is further upside in the trade.”