Came across this piece giving a bit of detail on Saba's position in Greek debt and was hoping to get a few insights on it and Boaz.
Based on this it seems he's long the 30yr, short near term bond(s), and locks in the basis with the recovery locks. Is that about right?
If so, why is that a good trade - isn't that similar to what caused the huge loss at DB?
Is he a credit trader that doesn't take into account counterparty risk - meaning he takes the view that if they can't pay then it's all gone to hell anyway so he may as well make as much as he can until the sh!t hits the fan?
What are people's view on him...next Meriwether, or is he legit?
"One such fund is Boaz Weinstein's $3.4 billion Saba Capital Management, which has been buying long-dated Greek bonds that are selling for about 40 cents on the dollar, said a person familiar with the fund's strategy. The former Deutsche Bank bond trader is said to favor Greece's 30-year sovereign debt because it sells at a substantial discount to the nation's short-term debt notes.
A person familiar with the trade said Saba is simultaneously buying so-called recovery swaps on those Greek bonds, a derivative that effectively locks in the price a bond would fetch in the event of a default. In the case of Greece, recovery swaps on the nation's 30-year sovereign bonds are selling for about 37 cents on the dollar.
Industry analysts say most hedge funds are shying away from the kind of Greek trade that Saba Capital, up about 3.5 percent this year, is doing because of the risk."
Link:
http://www.reuters.com/article/2011/07/05/ba-hedgefunds-performance-idUSN1E7600WH20110705
Based on this it seems he's long the 30yr, short near term bond(s), and locks in the basis with the recovery locks. Is that about right?
If so, why is that a good trade - isn't that similar to what caused the huge loss at DB?
Is he a credit trader that doesn't take into account counterparty risk - meaning he takes the view that if they can't pay then it's all gone to hell anyway so he may as well make as much as he can until the sh!t hits the fan?
What are people's view on him...next Meriwether, or is he legit?
"One such fund is Boaz Weinstein's $3.4 billion Saba Capital Management, which has been buying long-dated Greek bonds that are selling for about 40 cents on the dollar, said a person familiar with the fund's strategy. The former Deutsche Bank bond trader is said to favor Greece's 30-year sovereign debt because it sells at a substantial discount to the nation's short-term debt notes.
A person familiar with the trade said Saba is simultaneously buying so-called recovery swaps on those Greek bonds, a derivative that effectively locks in the price a bond would fetch in the event of a default. In the case of Greece, recovery swaps on the nation's 30-year sovereign bonds are selling for about 37 cents on the dollar.
Industry analysts say most hedge funds are shying away from the kind of Greek trade that Saba Capital, up about 3.5 percent this year, is doing because of the risk."
Link:
http://www.reuters.com/article/2011/07/05/ba-hedgefunds-performance-idUSN1E7600WH20110705
