Not a bad few days work!
When Carmelo Haddad and Francisco Ghersi invested half their hedge fund’s money into a soon-to-mature Venezuela bond in mid-January, only two outcomes were possible: the trade could go horribly wrong or it could pay off fabulously.
Bloomberg News reports that after all, the odds that Venezuela would make the February 26 payment were far from good. Racked by political turmoil, the economy was on the brink of collapse as slumping oil prices deprived the government of much-needed income. At the time, traders put the chance Venezuela would default in the next 12 months at 80% - by far the highest probability in the world.
Venezuela went on to make the $1.5bn payment, handing the founders of Knossos Asset Management a return of 12% in just 45 days - or an excess of 150% on an annualized basis.
“Every time a bond dies, people have their own war story,” said Haddad, who together with fellow Caracas native Ghersi oversees the fund’s $40m in assets. “We had our ups and downs. It was painful with the rumors, but we were comfortable with the trade or we wouldn’t have bet that much on it.”
To access the complete Bloomberg News article hit the link below: