Pharo Macro, Elliott, and TT Profit Off Distressed Sovereigns

Pharo Macro, Elliott, and TT Profit Off Distressed Sovereigns

Following the unfreezing of 31 billion euros pledged to Greece’s buyback program, Greek bonds underwent a strong rally and were upgraded to B- rating by S&P 500 (INDEXSP:.INX) recently. This earned Pharo Macro Fund, another solid month in last year, finishing the year up 12.5 percent. Greek bonds are now an established hot commodity, but they were not the only winning investment of the fund, Pharo Macro also profited from  its positions in Argentine and Italian bonds. Seems like all the Elliott drama and Paul Singer’s dislike for all things Argentine (except the bonds of course) played out for others as well. Speaking of Singer, the hedge fund titan is not so strict as you may think, he indulges himself in some musicals and theatre re-enactments as well. No he doesn’t act in them himself, he just invests in them. Apparently Elliott has invested in Beverly Boulevard II, a movie backer company. Beverly Boulevard II has financed ‘Les Miserables’, one of the winners in Golden Globes and also has hopes of snagging some silverware in the upcoming Oscars. Elliott Associates was up 13.4 percent, while Elliott International gained 12.4 percent in last year.

Pharo Macro, Elliott, and TT Profit Off Distressed Sovereigns

Coming back to Pharo Macro, the fund also gained in currency hedges. Mexican peso, Colombian peso and Russian rouble proved profitable in December. Shorts in JPY gained, while Turkish and Russian bonds appreciated. Losses were incurred from trades in short SA rand and longs in Chinese renminbi.

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TT International (AUM $1.37 billion) has been active in peripheral European debt as well, the fund gained 3.2 percent in December which accounts for most of the 4.2 percent return for the entire year. Portuguese bonds was a successful investment last year. Similarly Japan turned out to be profitable in all respects for TT. The fund gained from shorts in JPY, longs in Nikkei Index and longs in Japanese equities. These three positions have become an investing formula in Japan, the same set of positions have been popular in other hedge funds like, Odey Asset Management and MaxQ Fund. Another common theme in hedge funds is losing on gold (not to mention losing on Apple Inc. (NASDAQ: AAPL)). TT International lost in long gold positions, so did Elliott, David Einhorn, Seth Klarman and so many others. Despite the losses, the love for gold is not dying anytime soon, after all why fight the Fed.

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