August 13, 2019 / 7:31 PM / 9 days ago

Argentina market rout pummels Brazilian hedge fund

NEW YORK, Aug 13 (Reuters) - A Brazilian hedge fund was among the casualties of Monday's market rout on Argentine assets, with at least 75 percent of its equity exposure suffering losses between 25% and 59%.

Newfoundland Capital Management, based in Sao Paulo, was hit with a loss on paper of around $55 million, as its bets on four Argentine companies in agribusiness, natural gas, energy distribution and telecommunications imploded.

According to regulatory filings, just over 50% of Newfoundland's portfolio is split in New York- and Buenos Aires-traded shares of agribusiness Cresud, stocks that fell on Monday 38% and 25%, respectively.

U.S.-traded shares of electricity distributor Edenor , which plummeted 59% on Monday, amount to over 16% of Newfoundland's portfolio.

The one-day paper losses in those two companies alone amount to nearly $50 million. The remaining loss comes from Newfoundland's exposure to Telecom Argentina ADRs, which was down 33% on Monday, and Transportadora de Gas del Sur , which fell 48%.

The most recent regulatory filings, from last May, list holdings as of March 31. Newfoundland did not return calls or emails seeking comment or confirmation of any material change in its positions since. The Argentine local filing in Cresud shares is as of June 2018.

Disclosure of the fund's ADR holdings as of the end of June 2019 are due to the U.S. Securities and Exchange Commission this week.

Previous filings show the fund has mostly been building up its positions in the ADRs since at least mid-2018. In the case of Nasdaq-traded Cresud shares, a position of 1.5 million shares from the third quarter of 2017 has grown in every quarter but one since, and was built up to 5.8 million shares.

Four of the five stocks in Newfoundland's portfolio that tumbled on Monday were up between 2% and 9% each in afternoon trading on Tuesday, while Edenor was down another 2%.

Monday's market rout in Argentina followed results from a primary election that dealt a blow to market-friendly President Mauricio Macri's re-election chances in October. Argentina's peso and dollar-denominated bonds fell again on Tuesday. (Reporting by Rodrigo Campos; Additional reporting by Christian Plumb; Editing by Dan Burns and Paul Simao)

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