Daniel Yu, best known for betting against companies via his short-selling firm Gotham City Research LLC, says he’s waiting in the wings for Greece to leave the euro — so he can start buying.
The short seller shot to fame by claiming to expose dubious practices at companies, and says that won’t change any time soon. But now, he’s eyeing Greek shares in the event the country repudiates its debt and exits the shared currency. When, not if, all of that happens, stocks will rise again, he says.
“I’m going to be wildly bullish if they leave, I’ll look at anything and everything Greek,” Yu said by phone from New York. “If Greece leaves the euro, it basically means they’re not going to pay their debt, and that’s a good thing. Once you have debt relief, there are so many positive things that can happen to an economy.”
Recently back from a trip to Greece, Yu says the plight of the Mediterranean nation has now caught his attention. With the country running out of money, the International Monetary Fund and many economists agree that its debt is too large for it to pay. Prime Minister Alexis Tsipras surrendered to the demands of its creditors in a July summit billed as Greece’s last chance to stay in the euro, but he said he capitulated because leaving the currency would have been too destructive.
Choosing to remain anonymous until recently, Yu made waves last year after a bearish call on Let’s Gowex SA. The Madrid Wi- Fi provider filed for insolvency about a week after Gotham said the stock was worthless because it inflated revenue. In April 2014, Yu triggered a 39 percent one-day drop in Quindell Plc, a U.K. technology company, after questioning its profits.
Famed short sellers making bullish calls is becoming somewhat of a trend: Jon Carnes, ranked the best short worldwide, said last month that he sees the Shanghai Composite Index more than doubling. Carson Block, the founder of Muddy Waters LLC, sent France’s Bollore Group soaring in February after betting the stock could double.
In Greece, Yu will likely find plenty of bargains. Its stock market, which just reopened after a five-week shutdown, has already lost more than 85 percent of its value since 2007. A gauge tracking its banks trades at a record low, down for a sixth year.
“The tidal wave is a Grexit, it needs to happen,” Yu said. “The potential boost of confidence and hope they inspire when they leave the euro is vastly underestimated. We don’t live in a world merely dictated by numbers and stats. Confidence and hope matter.”