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Whether They Know it or not, Hedge Funds Love Greece ETF


Admittedly, that headline is something of a stretch because hedge funds may or may not be establishing large positions in the Global X FTSE Greece 20 ETF (GREK) . What is known is that some big-name hedge funds are bullish on previously downtrodden Greek banks.

John Paulson’s Paulson & Co. and other U.S. hedge funds are gobbling up shares of Greek banks on expectations that one of Europe’s most beaten-up banking sectors has seen its darkest days. Paulson, who made winning bets on the sub-mortgage crisis and subsequent rebound in U.S. bank stocks, said his fund had substantial stakes in Piraeus Bank and Alpha Bank, according to the Financial Times.

That is important for GREK because financial services is the ETF’s second-largest sector weight at 15.3%. National Bank of Greece (NBG) and Alpha Bank are GREK’s fourth- and fifth-largest holdings, respectively, combining for more than 12% of the ETF’s weight. [Greece ETF Bounces Back]

Paulson’s move into Piraeus and Alpha became public just a few months after David Einhorn’s Greenlight Capital revealed “medium-sized long positions” in those banks. News of Einhorn’s stakes in Greek banks was publicized in late July. Since August 1, GREK has surged 22.3%.

Baupost, Eaglevale, Dromeus Capital, Falcon Edge, York Capital and Och-Ziff are among the other hedge funds that are making large bets on Greek banks, the FT reported, citing unidentified sources.

Interestingly, hedge funds that are bullish on Greek banks are, albeit indirectly, signaling they are bullish on emerging markets financials. After all, index providers Russell Investments and MSCI (MSCI) both demoted Greece to emerging markets status earlier this year. The MSCI announcement, the second of the two, was made in June. Since June 14, GREK is up 25%. [Another Index Provider Sends Greece to Emerging Markets Status]

Global X FTSE Greece 20 ETF

ETF Trends editorial team contributed to this post.


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