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Algebris Macro Credit Fund Outperforms 98% of Peers

(Bloomberg) -- Alberto Gallo’s pessimism toward Argentina is paying off.

His $649 million Algebris Macro Credit Fund, co-managed with Aditya Aney and Gabriele Foa, has trounced 98% of peers this year, data compiled by Bloomberg show. The London-based money managers have benefited from being long Treasuries from the U.S., Australia and Italy while going short Argentina and the U.K.

Their latest success was piling into Argentine credit-default swaps in the month before the nation’s presidential primary vote on Aug. 11. Gallo said a trip to the South American nation in June convinced his team that the market was overly optimistic about President Mauricio Macri’s reelection odds. They were right. Macri lost by more than 15 percentage points to opposition foe Alberto Fernandez and prices for Argentine CDS soared as markets tumbled.

“Argentina is like a sinking boat where two people are fighting each other instead of fixing the holes,” Gallo said in an interview. “The situation is definitely unsustainable, but at the same time, bond prices are close to the lowest levels they could be.”

He said Algebris is still trading Argentina’s five-year credit-default swaps, although the firm has turned more neutral on the nation’s debt after prices tumbled. He said the firm expects a restructuring, not just an extension.

His team sees value in some frontier markets including debt from Ukraine and Egypt.

“In EM it’s very difficult to take a view on more liquid markets with the trade war and deteriorating growth outlook,” Gallo said. “But there’s room for these bonds to perform well given the big global easing cycle.”

To contact the reporters on this story: Ben Bartenstein in New York at;Sydney Maki in New York at

To contact the editors responsible for this story: Julia Leite at, Alec D.B. McCabe

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