08/18/1998 21:42:10 CORRECTED - Interest in Soros' Quantum fund up as rouble falls
In LONDON story headlined "Interest in Soros' Quantum fund up as rouble falls", please read in third paragraph...three percentage points more than before...instead of...three percent more than before. A corrected story follows.
By Andrew Priest LONDON, Aug 18 (Reuters) - Investors are flocking to try to get a piece of the man who got the rouble right -- George Soros. Once again, the Hungarian-born investment guru has been in the spotlight in a major market drama, by correctly arguing that the rouble needed a devaluation. On Tuesday, a day after Russia dramatically announced a rouble U-turn, Soros's main London broker said investors were paying a 13 percent premium for shares in his flagship Quantum fund, three percentage points more than before. "There has been good demand for Quantum since last week," Edgar Astaire at Edgar Astaire and Company, Soros' funds main London broker, told Reuters. He added that the premium had risen from 10.12 to 13.15 percent. Fund experts said the American billionaire's comments on the rouble last week, just days before the Russian government effectively devalued the currency, had heightened the mystique that already surrounded his investment plays. They added his well-timed comments about Russia's financial plight had also given him huge publicity. "When one country is blowing up and another is bouncing Soros is one of those guys who has been able in the past to take advantage," said one senior hedge fund consultant in London. "Does he use his own views to leverage that? Well, Soros is an ace on the marketing side, no question about that," said the consultant who advises institutional investors and high net worth individuals on picking hedge funds. Soros wrote last week that Russia could only solve its financial crisis by introducing a currency board after a "modest" rouble devaluation of 15 to 25 percent. On Monday Russia announced a widening of the rouble's current exchange rate corridor and a 90-day moratorium on some foreign debt payments, excluding state debt. The widening of the currency corridor, with a bottom rate of 9.50 to the dollar versus an earlier 7.13, was seen by many analysts as an effective devaluation of the currency. In an attempt to distance himself from any allegations of self-interest Soros issued a statement late on Thursday saying he had no short position in the Russian rouble and no interest in shorting that currency. Fund experts said institutional investors were currently taking a hard look at the potential benefits of some hedge fund strategies in the currently volatile global markets. "Hedge funds have returned to investors' radar screens in a big way in recent months," said the consultant, noting that global macro funds such as Quantum -- which make major bets on trends in asset values -- were among the best performing hedge funds in uncertain trading environments. Quantum is an unlisted closed-end fund, but unlike most hedge funds can be traded daily although only through a limited number of brokers approved by Soros. The premium at which it trades relative to its net asset value is a good measure of shareholders' trust in the eclectic investment decisions of its fund managers, especially Soros. Soros, nicknamed "the man who broke the pound" after making a successful $10 billion bet against sterling, precipitating its exit from the European Exchange Rate Mechanism in 1992, can also count some spectacular failures among his many global financial bets. He failed to call the 1987 global stock market crash and during 1994 lost substantial funds on short-yen positions, with Quantum losing $600 million in one day in February 1994. In a Reuters interview in October 1994 Soros said a U.S./Japan trade deal would help the dollar rise to 115-120 yen. In fact the dollar fell and by April 1995 was trading around 80 yen. But Soros' investors have had little to complain about this year. Quantum's net asset value has increased 19.9 percent since the beginning of 1998 versus an 11.0 percent rise in the Morgan Stanley Capital International World U.S.-dollar denominated index, according to figures from Soros' London broker. ((London newsroom +44 171 542 5113, fax +44 171 583 7239, firstname.lastname@example.org))