The best investment idea of 2012 is some Greek stocks. Bloomberg published an article yesterday reporting a hedge fund that is trying to raise capital to invest in safer Greek stocks. Here is what the article says:
They are focusing on companies punished by the stigma of being in Greece that generate most of their business outside the country, and firms whose share prices may make them attractive takeover targets. “The whole premise behind the idea is that Greece has technically defaulted within a strong currency,” said Elliott, who studied money management at City University in London before starting his finance career in 1997 as an investment banker at Societe Generale SA. He also worked as a stock analyst at Marfin Investment Group SA and as an investment manager for Prometheus Gas SA, a Greek unit of Russia’s OAO Gazprom. “When Argentina defaulted, they had incredible returns on the stock market but incredible volatility on the currency as well so it was pretty hard to start making allocations,” he said. “If Greece remains in the euro, we think this is going to be an incredible investment opportunity from a risk-return perspective.” Conversely, the return of the drachma, which Elliott predicts won’t happen, means investors could buy stocks more cheaply.
According to Bloomberg George Elliott’s Naftilia Asset Management raised more than $60 million so far. We aren’t sure George Elliott is the perfect person to pick the Greek stocks but we like the idea. Paul Ruddock and Steve Heinz’s Lansdowne Partners already bought stakes in “Greek port companies Piraeus Port (PPA) Authority SA and Thessaloniki Port (OLTH) Authority SA during the first four months of the year, according to a presentation obtained by Bloomberg News”. This is a brilliant idea. The demand for these two companies hos nowhere to go but up.
The main problem with investing in safer Greek stocks is the possibility of Greece’s exit from the euro zone. In that case, Greek stocks will get even cheaper. That means big losses for current investors. On the other we think Greek companies that are still profitable at this moment are the least riskiest stocks on the planet. If they can survive in this environment, then they will flourish when Greek economy normalizes in a few years.