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PIIGs, Greece, OPAP, Klarman


indythinker85
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I posted this earlier in general discussions but think it would be better here. First verbatim:

 

The PIIGs are extremely cheap (an understatement) on a quantitative basis. Obviously, the macro problems are known to all, and I personally think the euro-crisis is not over. But I am not a market timer. I own some of the ETFs (which are not the best tracking tools) with the largest allocation to Greece. I am scared to buy individual names, as I do not have enough time and doubt its in my circle of competence, but I would consider a basket of equities. Is anyone here investing the region? If so, how?

 

Thanks in advance.

 

I was looking at several Greek companies one of which was OPAP. There is recent news that Klarman has 5.2% stake http://www.reuters.com/article/2013/01/29/us-greece-opap-hedgefund-idUSBRE90S0N620130129, and wants a 10% stake http://www.valuewalk.com/2013/02/greek-gambling-monopoly-opap-attracts-value-investors/. A few other companies i have been looking at (as basket), curious to hear if anyone else is.

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Both OPAP and EXAE are positions of mine.  Opap is an incredible business (as it stands) w/ a strong catalyst.  IMO at the current $ you are being more than compensated for FX and legal risks. 

 

Greece, broadly speaking, is very cheap  (http://www.zerohedge.com/news/2013-01-01/cleanest-dirty-shirt-or-3rd-most-expensive-equity-market-world) and a decent place to look if you don’t mind going a little off the beaten path.  The political situation is very fluid and FX is a real risk but at under 5x PE10 it’s a risk I’m willing to take (for those of you who are into Shiller PEs there was a good paper on PE10s and EM last year: http: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2088140 ) .

 

Don’t know if this has been posted before but it is worth a read: http://www.businessweek.com/articles/2012-06-21/a-hedge-fund-hunts-for-greeces-hidden-gems

 

Looks like Fairfax, BAM, and WL Ross are looking around also:  http://www.google.com/translate?hl=en&sl=auto&tl=en&u=http%3A%2F%2Fwww.kerdos.gr%2Fdefault.aspx%3Fid%3D1866823%26nt%3D103

 

 

A word of caution:  I would question any news source that says Baupost is intending to increase (or decrease) their stake in anything.  Baupost is very quiet about what they are up to, I doubt they would let it leak they are “targeting to cross 10% ownership” before they are forced to file.  Leads me to wonder if they are trying to put a bid under their selling.

 

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Guest hellsten

6-month performance for 8 Greek companies:

Hellenic Exchanges - EXAE +105%

Hellenic Telecom - HLTOY +228%

OPAP - GOFPY +25%

Coca-Cola Hellenic - CCH +53%

Hellenic Petroleum - ELPE +51%

Autohellas (Hertz) - OTOEL +51%

Follie Follie Group - FFGRP 130%

Bank of Greece - ETE -10%

 

I didn't double check the figures, so hope they are correct…

 

I guess banks should be avoided.

 

Massive Dilution Coming For National Bank Of Greece Shareholders:

http://seekingalpha.com/article/1097711-massive-dilution-coming-for-national-bank-of-greece-shareholders

 

More companies can be found here:

http://www.athex.gr/content/en/companies/ListedCo/Profiles/sectors.asp

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  • 1 month later...

 

I hear he sold out of that position at a 35% profit in early 2011, right around the time of the second letter, b/c the risk of Greece leaving seemed too high. lol  Did however start buying again in July 2012 after price fell through the floor.

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Yeah, I hold GREK.  Also have EIRL, EWP, EWI.  Nice piggy basket. It seems cheap markets work well, like cheap stocks.  I'd love to see a Shiller PE, magic fomula combo strategy.  Cheapest/Quality stocks in the cheapest markets...  Probably closer to what I would be doing in these markets if I could afford the broker fees.

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I posted this earlier in general discussions but think it would be better here. First verbatim:

 

The PIIGs are extremely cheap (an understatement) on a quantitative basis. Obviously, the macro problems are known to all, and I personally think the euro-crisis is not over. But I am not a market timer. I own some of the ETFs (which are not the best tracking tools) with the largest allocation to Greece. I am scared to buy individual names, as I do not have enough time and doubt its in my circle of competence, but I would consider a basket of equities. Is anyone here investing the region? If so, how?

 

Thanks in advance.

 

I was looking at several Greek companies one of which was OPAP. There is recent news that Klarman has 5.2% stake http://www.reuters.com/article/2013/01/29/us-greece-opap-hedgefund-idUSBRE90S0N620130129, and wants a 10% stake http://www.valuewalk.com/2013/02/greek-gambling-monopoly-opap-attracts-value-investors/. A few other companies i have been looking at (as basket), curious to hear if anyone else is.

 

Spain has quite a few large companies which should not be too affected by the situation here, which is getting worse fast.

 

http://www.economist.com/news/business/21573153-rubble-signs-hope-foreign-gain-domestic-pain

 

Some companies I own are Duro Felguera and Prim, in Spain, and Corticeira Amorim in Portugal.

 

 

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  • 1 month later...

I've got positions in GOFPY for a year or two.

 

A couple of observations:

 

A). Through the depths of the Greek crisis, OPAP has been profitable.

B). They have continued to pay dividends, albeit reduced.

 

I think that OPAP will continue to be profitable almost no matter what.  People want to be able to gamble a few euros with the chance of winning more.

 

Even if the standard of living goes down in Greece, which it most likely will...things would have to get unbelievably bad before people would stop betting 2-3-4 Euros on something.

 

Also, I think their earnings will be somewhat protected EVEN IF Greece exits the Euro.  People will still gamble the equivalent of a couple of Euros, whether that is 50, 100, 1000 or 10,000 drachmas.  At the very low end of gambling, people are still going to engage in it for a few dollars or a few Euros...

 

Also, what if things ever improve in Greece?  I know that is a very odd assumption, but I'm talking 3-5 years from now.  Things could improve at some point?

 

In my opinion, OPAP is one of the very best companies to own in Greece.

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Guest hellsten

I think that OPAP will continue to be profitable almost no matter what.  People want to be able to gamble a few euros with the chance of winning more.

 

There's one thing that might help OPAP: the poorer the people the more they want to gamble. Greeks will be a lot poorer in the near future:

 

Most people who gamble do so only occasionally and wager small amounts. However, poor people gamble more than wealthy people do. In addition, many people are compulsive gamblers, whose gambling resembles a drug addiction in that they become high, develop tolerance and need to gamble more, become dependent, and feel the pain of withdrawal if they stop gambling.

 

https://www.ncjrs.gov/App/publications/Abstract.aspx?id=149278

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I think that OPAP will continue to be profitable almost no matter what.  People want to be able to gamble a few euros with the chance of winning more.

 

The beuty of OPAP is not that people´s gambling habits are that resilent, but the business model. Most of the costs are variable and directly linked to sales, so even if revenues would drop 50%, OPAP would still make a profit.

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