Hedge Fund Investor Who Called Housing Crash Eyes Venezuela Debt

(Bloomberg) -- A hedge fund manager who correctly timed the crash of the US housing market and a crypto currency rally eight years ago thinks he’s found his next overlooked investment: Venezuelan debt.

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Bonds the country defaulted on nearly five years ago are trading around record lows, with some oil debt available for 2 cents on the dollar. Adding to the risks, the government is under sanctions that prohibit US investors from buying the notes.

Yet, Lee Robinson said recent engagement between Washington and Venezuela President Nicolas Maduro signals an eventual easing of sanctions, which would open the door for the government to restructure the $60 billion, plus interest, it owes bondholders. His London-based company, Altana Wealth, has been loading up on the paper ever since it launched a dedicated Venezuela debt fund in 2020, recently doubling its investment to about $40 million.

“Ultimately this is a binary event. It doesn’t really matter whether you’re buying this at 7, 8, 9, or 10. At the end of the day, you’re gonna get multiples of that back in almost any scenario of sanctions being lifted,” he said in an interview.

The US and Venezuela carried out a rare prisoner swap this month and Secretary of State Antony Blinken said the US is willing to reconsider sanctions if Maduro takes “constructive steps” to restore democracy. President Joe Biden sent a high-level delegation to visit Maduro in March when oil prices surged at the onset of the war in Ukraine. The governments have been in talks ever since.

Robinson, who previously worked for Paul Tudor Jones, shorted the housing market in 2008 and launched a digital currency fund in 2014 to ride bitcoin to four-digit returns. Altana, which he launched in 2011, manages about $500 million in assets.

He predicts the US will ease some sanctions following the midterm elections in November, when the political stakes of taking such a decision are seen as lower for Democrats. Since it’s based outside of the US, his fund is not subject to the sanctions, which restrict US individuals from buying the debt.

“If you’d asked me this time last year, I would’ve said, ‘maybe something happens before 2024 because the elections, but I can’t tell you,” he said. “Things have changed. Matters have accelerated.”

Robinson is not alone in his forecast. Medley Advisors analyst Pilar Navarro sees relief coming before the end of the first quarter of 2023.

Robinson’s Cayman Island-based Altana Credit Opportunities Fund was up 27% as of August this year, according to a newsletter sent to investors and seen by Bloomberg. That compares to average losses of more than 20% in a Bloomberg index of developing-world bonds. If he’s right about Venezuela, he said, it will result in a major payout.

“It’s a fantastic opportunity,” he said. “You may never want to invest in Venezuela, but if you do want to invest in Venezuela, you need to be doing it soon because anything could happen after November the eighth.”

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