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Espirito Santo Still Haunting Portugal ETF


Some hedge funds are loving the collapse of Portuguese bank Banco Espirito Santo. The Global X FTSE Portugal 20 ETF (PGAL) is, obviously, not a hedge fund nor is it taking news of Espirito Santo’s demise well.

London-based hedge fund Marshall Wace LLP shorted Espirito Santo at 99 euro cents, a prescient call considering the stock was halted today in Lisbon at 12 euro cents, reports Laurence Fletcher for the Wall Street Journal. If that position has been closed, Marshall Wace made $36 million, according to the Journal.

Shares of PGAL, the lone Portugal ETF, are off 3% today on volume that is already more than quadruple the daily average. That makes the ETF the worst-performing non-leveraged ETF on a percentage basis and one of just three ETFs to hit new all-time lows today. [Familiar Problems for Portugal ETF]

That extends PGAL’s one-month decline to 17.6%, more than double the loss incurred by the iShares MSCI Spain Capped ETF (EWP) over the same period. Of the five single-country ETFs tracking PIIGS nations, PGAL is by far the worst over the past month.

Other hedge funds that have benefited from the fall of Espirito Santo include TT International and Altair Investment Management, according to the Journal.

If there is a silver lining for PGAL it is that Espirito Santo is no longer part of its lineup because the shares are essentially worthless. A spreadsheet available on the Global X web site shows Espirito Santo represented 0% of PGAL’s assets.

Highlighting just how rapid the stock’s fall from grace has been, Espirito Santo occupied a weight of 3.5% in PGAL as recently as Aug. 1. The ETF had a 17.2% weight to the financial services sector at the end of the second quarter, according to Global X data. [Bank Woes Plague Portugal ETF]

Global X FTSE Portugal 20 ETF


ETF Trends editorial team contributed to this post.

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