March 2, 2016

On Wednesday, the S&P 500 rose 0.4% while Toronto was up 0.3%.

AutoCanda was up 5.6% but that of course is after months of declines… I eagerly await their Q4 earnings report to see where things stand.

Canadian Western Bank was up 4.7% and releases earnings tomorrow.

One interesting piece of news is about some Hedge funds that managed to get back 75% of the face value plus accrued interest on some Argentina government bonds. Some years ago Argentina attempted to force bond holders to accept much smaller payouts and these hedge funds snapped up the debt at huge discounts. With this settlement one of the funds has apparently made gains of some 392% (but that would sound far less impressive, though still very good if annualised over the period of the dispute). The top gainer was apparently one hedge fund with a 952% gain on the original investment. Argentina had wanted to do this discount deal years ago without being declared in default. And most of the bond holders agreed years ago to a far smaller payout. But these hold out hedge funds had refused to agree to a settlement and held out for more money. These hold out hedge funds have been vilified in some circles as opportunists or vultures or some such thing. But the fact that the hedge funds bought this debt cheaply has no relevance whatsoever to the amount they were owed. They were owed the full face value plus accrued interest, though they have now settled for 75% of that amount. It took 14 years for this settlement to be reached. And they don’t quite have the cash in pocket just yet. The hedge funds took the risk of buying this debt and those who sold it to them got at least some cash immediately. And it was a large risk; the former President of Argentina was adamant about not paying and it is hard to force sovereign nations to do things. The new President basically wanted to restore Argentina’s credit rating to some degree. What the hedge funds did was simply part of how the market works. I would congratulate them on their gains.