* Cuts exposure to bank stocks and debt
* Says Libor scandal unlikely to hit bank subordinated debt
* Looking at opportunities in Greece after recent trip
* $100 mln Global Opps fund opened to external investors
* Cube targeting a further $400 mln for fund
By Laurence Fletcher
LONDON, July 4 London-based hedge fund firm Cube
Capital has sold positions in bank debt and stocks during the
market rally of recent weeks, betting that prices will fall back
again as the euro zone's ongoing debt crisis continues to drive
big swings in markets.
However, senior portfolio manager Nick Linnane said the
growing scandal over the rigging of the Libor interest rate -
which on Tuesday saw Barclays CEO Bob Diamond quit and which has
seen investigations into more than a dozen banks - looks
unlikely to affect the price of bank subordinated debt.
Linnane, who runs the Cube Global Opportunities fund, told
Reuters he had increased his position in subordinated bank debt
earlier last month but has recently reduced the stake after
seeing it rally during June.
He has also sold down some bank stocks in France and the UK
over the previous 10 days, although he declined to name the
"When the market is rising you probably want to be selling,"
he said in a recent interview.
"We've been cutting exposures. The market has run up a bit
this month. Our view is that the European situation, with
risk-on risk-off, is going to continue for an extended period of
Over the past month the MSCI World Equity index
has rallied 8 percent and the STOXX Europe 600
banking index has jumped 14 percent on growing hopes
Europe's debt crisis can be contained.
Investors were buoyed by Friday's decision by euro zone
leaders to let their rescue fund inject aid directly into
stricken banks from next year and intervene in bond markets to
support troubled member states.
Linnane said possible U.S. litigation over the Libor rigging
scandal would "hang over their (banks') equity prices" but that
much of the scandal was already priced into shares in Barclays
, which is paying $453 million to U.S. and British
authorities to settle allegations it manipulated Libor.
"Movements in Barclays' share price over the last week - and
in particular its movement relative to other banks involved in
the Libor setting process who also have substantial U.S.
businesses - indicate there is now quite a lot priced into
Barclays stock as far as Libor price-fixing exposure goes," he
said late on Monday.
Barclays shares were down 0.7 percent to 165.8 pence at 0920
Linnane added that potential litigation settlements were
unlikely to affect banks' subordinated bank debt.
"Could the losses be big enough to impair subordinated debt
of banks? We currently don't think so and the market is
currently reacting consistently with that view."
Meanwhile, Cube CEO Francois Buclez said the hedge fund firm
is eyeing opportunities in debt-stricken Greece after a recent
trip organised by a local contact.
"We've just come back from a week-long trip to Athens, where
we've started to identify opportunities that have not yet
matured," he said.
"The opportunities could be equity, or in restructured
bonds, which have risen after the elections, but there could be
another bite at the apple. We're watching that market closely."
Cube, which manages $1.3 billion in assets, said on Monday
it has opened its $100 million Global Opportunities fund, an
event-driven fund that invests in stocks, bonds and derivatives,
to external investors.
Buclez said he hoped to raise another $400 million for the
The first $50 million of investors will be in a special seed
class, with a 1 percent management fee and 20 percent
performance fees charged on gains of more than 5 percent.
Investors after that will pay a 2 percent management fee and 20
percent performance fees on all gains.