Hedge fund Autonomy Capital Drops $1 Billion on Argentinian Wagers

September 12, 2019 | Headlines, Hedge Funds
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Autonomy Capital lost that much in one month following political turmoil in Argentina

Autonomy Capital is facing a lot of problems. Last month we reported on the losses suffered by Brazilian hedge fund Newfoundland Capital Management in Argentinian stocks.

Turns out Autonomy Capital, the prominent macro fund founded by Robert Gibbins, took a few hits as well.

Both funds lost serious money in a financial markets crash after Argentinian president, Mauricio Macri, lost a primary election.

Autonomy Capital had big bets on Argentina

The hedge fund is known for making concentrated, macroeconomic, country-focused wagers. In Argentina, the fund was expecting an economic recovery led by the reformist and pro-business Macri.

Autonomy invested heavily in Argentinian bonds, and in positions assuming the country would make good on its debt instead of defaulting. Gibbin’s fund also invested in 100-year Argentinian bonds. However, the country’s bonds carry a junk rating.

Macri’s loss in the primary election sent markets into a swoon on fears he will lose a re-election bid in October.

Autonomy’s losses could be $1B

It remains unclear on the size of Autonomy’s overall exposure to Argentina.

However, the fund reportedly lost 23% in August, or about $1 billion.

We also do not know whether the fund closed any of its loss-making positions. According to insiders quoted by the Wall Street Journal, Gibbins continues to be bullish on Argentina.

Argentina on the brink?

Argentina was recently assigned a default rating by Standard & Poor’s on some of the country’s debts totaling $101 billion. Subsequently, Fitch, too downgraded Argentina to what it called “restrictive default,” because it missed a payment.

In a sign of desperate times, the government imposed foreign exchange controls last Sunday.

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