Henderson Horizon Pan European Alpha manager Paul Casson has initiated short positions in a basket of Spanish stocks on expectations of a Greek-style sell off.
Casson says similar to the selling pressure Greek equities faced over the country’s well-documented debt concerns; Spain’s fiscal problems could also lead to a severe correction.
However, while Casson says the Greek Government is now ready to address the problems, he believes Spain is reluctant to act.
Casson has moved net short in Spain to take advantage of an expected wave of short selling.
“We think these positions will be relatively short term as we hope these troubled European countries will follow the lead of Ireland and Latvia in formulating a credible fiscal plan,” the manager says.
While Casson concedes the recent global sell-off could continue in the near term, he believes Pan European Alpha can profit from short-side opportunities.
“These sovereign default fears have coincided with Chinese growth worries and proposed banking reform in the US, and have over shadowed what has already been a reassuring results season in the US,” Casson adds.
“Once these fears begin to subside we believe investors will once again focus on the global recovery. In the interim we intend to take full advantage of the shorting opportunities that come our way.”
Casson’s Henderson Horizon Pan European Alpha was one of the top performing European equity funds last year, up 34.8%.
