Argentina’s Stock Rout Hammers Newfoundland Capital Management

August 14, 2019 | Hedge Funds, News

Argentina’s post-election crash pounds Brazilian long-only fund.

Newfoundland Capital Management watched its assets evaporate after Argentina’s market crash this week. The Brazilian asset manager had $300 million in a long-only fund that invested heavily in Argentine stocks.

The fund’s losses could be substantial given that Argentina’s key stock index crashed 33% this week following political developments that dimmed President Mauricio Macri’s re-election chances in October.

Newfoundland Capital and its long-short fund barely escapes

However, the fund’s long-short fund, which had assets of $500 million, suffered only nominal losses. The fund lost about $5 million, or 1%. The fund reportedly hedged its long positions with put options and stock shorts.

Newfoundland’s co-founder Jonathan Myles Rosenthal said his fund was the “largest equity holder of single stock puts in the market.”

Argentina’s stock debacle

According to Bloomberg, the unexpected outcome of the primary election sent the S&P Merval Index crashing by 48% in dollar terms.

Bloomberg has covered 94 stock exchanges since 1950. The firm says Argentina’s crash was the second largest one-day slide since it started tracking the indices.

The stock (and currency) rout also took a severe toll on six funds run by well-known fund manager Michael Hasenstab, with one estimate of the losses being $1.8 billion.

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