In The News - Bloomberg - Hedge Fund That Timed Big Short, Crypto Rally Eyes Venezuela

Altana is pitching the South American nation’s government notes, which can be bought at pennies on the dollar, as the “trade of the new decade”.

By Ben Bartenstein and Nishant Kumar

Venezuela’s bond market has been rocked over the past few years by defaults, sanctions and a collapse in crude oil prices. Yet the disastrous cocktail is attracting hedge funds including London’s Altana Wealth Ltd. that say the situation can’t get any worse.

Altana is pitching the South American nation’s government notes, which can be bought at pennies on the dollar, as the “trade of the new decade,” according to two letters to investors seen by Bloomberg.

In one of the letters, founder Lee Robinson said he plans to launch a Cayman Islands-based portfolio next month to capitalize on Venezuelan bond prices that he says could eventually multiply tenfold. He compared the risk-reward to returns delivered during the dot-com craze of the 1990s, shorting sub-prime mortgages before the collapse of that market in 2008 and riding the cryptocurrency rally in recent years.

“At these levels, the downside is low and the upside is the best we’ve ever seen for a sovereign debt restructuring,” Robinson and his colleague Steffen Kastner wrote in one of the letters.

Robinson, who previously worked for hedge fund billionaire Paul Tudor Jones, has a track record with opportunistic wagers. In 2014, he started a digital currency fund, which rode a rally in Bitcoin to four-digit returns.

Altana manages about $300 million across a number of funds including currency and distressed debt money pools.

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