Don’t Cry for Me Argentina

Pfäffikon SZ, Switzerland – It is perhaps one of the most high-profile legal battles of the past fifteen years. Hedge fund manager Paul Singer got at loggerheads with Argentina after the country went into default thirteen years ago. Singer claimed the money from his bonds back and forced Argentina to the knees last Sunday. Singer gets 75% of his money ($4.4 billion) back with interest and $235 million for attorneys’ fees and external debts. According to Argentina, Singer only paid $48 million at that time for state loans.

Lawsuits
Many Argentinians do not understand that Singer could keep their land so long in his grip and cut off from financial markets. At first, it has to do, of course, with the unyielding nature of Singer. He is fond of lawsuits, does his homework extremely well, and is a master at buying up “distressed assets.” In addition, it saves much that he can litigate in New York, but this is usually a part of his cunning strategy.

Singer is reviled by many, while others point to his correct, activist way of doing business. When a country issues a bond, it must simply repay its debt. Earlier, Singer sent Peru insane by going after the presidential plane. The impoverished Congo has also paid a high price for the dynamism of the driven hedge fund manager. Water or no water, Congo just had to pay, which was done.

Banned
The Netherlands has simply banned the practice of Singer. In Europe, hands do not go together like in the U.S. for Singer. Furthermore, I cannot deny the impression that Singer uses political influence to achieve his goals. The U.S., after all, could have intervened to bring the issue with Argentina to a decent end. The dispute dates back to the days of Ronald Reagan, who had found a solution, apparently not one to the liking of the wayward Paul Singer. It seems that there was more going on behind the scenes. For several large banks, there was also a lot of money involved in the issue.

Refreshing
Activistic, legally and financially driven asset management is a lucrative sport. Paul Singer is perhaps the world’s best in his field and a real job creator. In spite of the fact that it will never be my way of investing, the manner of Singer does work. A nation or company cannot just be untidy in dealing with its obligations. Managers like Singer keep the financial minds sharp. All Argentinians know by now that the issuing of a bond entails obligations. There are plenty of nations and businesses that still have to learn the same lesson.

It remains for me to wish you a good weekend.


Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in the above mentioned shares and has no intention of doing so in the next 72 hours.