Iraq-Focused Hedge Fund Rebounds In February
March 25, 2008
After getting off to a slow start in January, Godvig Capital’s US$15.4 million Iraq-focused Babylon Fund rebounded nicely last month to the tune of 10.3%.
All asset classes in the portfolio, including Iraqi bonds, oil equities and banking stocks, contributed to the fund’s rebound, according to portfolio manager Björn Englund.
“During the month we maintained our prime investment strategy to increase our fund's exposure in a broad-based manner into what we regard as undervalued blue chips on the Iraqi Stock Exchange,” Englund wrote in an investor letter. “Beyond what most market participants (still too often inexperienced and trend-following though) regard as obvious opportunities, we also start to scan for new opportunities in the pre-IPO market.”
Englund remains optimistic on the “normalization” of Iraq’s economic future noting the formation of a “functioning shadow market, with characteristics of OTC-structure” and a planned secondary market trading of bonds and T-bills. “Perhaps the best (?) sign of normalization took place recently; the first underground hard metal concert in Baghdad,” he notes.
via FINAlt
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This seems like a very risky investment to me considering all the news around U.S. involvement in Iraq. I don't like how they are looking to IPOs as well because on average most of them underperform the market. This may be incorrect, but I think the U.S. presence there bring a lot of credibilty and stability to the goverment and once we leave will the government could bonds react adversely. Probably not the smartest investment, but definitely an interesting one.
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