Can Investors Find Value in the Greek Crisis?
Greece’s economy is in shambles. Unemployment persistently resides in the double-digit range. However, investors can benefit greatly from turmoil. Catastrophe breeds lower asset prices. However, those asset prices can also be justified. Let’s take a look at three exchange traded funds (ETFs) and a Greek bank to see if they are OK for investment.
Global X FTSE Greece 20 ETF (NYSEMKT: GREK) keeps track of 20 publicly traded Greek companies, according to MarketWatch. The ETF manages roughly $300 million in assets and possesses a Greek weighting of 76%. Interestingly, Coca-Cola HBC, a Coca-Cola bottler, represents the fund’s largest holding at 21%.
This bottler, while in state of decline, generated positive free cash flow in fiscal 2014 of €333 million, giving this fund a small degree of margin of safety. Unfortunately, the fund also possesses heavy weighting in the country’s ailing financial sector, which is starving for bailouts. The fund currently trades around $10 per share, representing a whopping 60% decline from its five-year high of $24.93 reached in March of 2014.
RevenueShares Global Growth ETF (NYSEMKT: RGRO) possesses a 9.6% Greek weighting. This fund trades at a 12% discount from its 52-week high. Investors’ distaste for the fund’s exposure overlooks the fact that more than 90% of its securities lie elsewhere, enhancing this fund’s potential for gains.
Cambria Global Value ETF (NYSEMKT: GVAL) possesses a 9% Greek weighting. The fund trades at a whopping 28% discount from its high of $26.76 per share, set on June 10, 2014.
The National Bank of Greece S.A. (NYSE: NBG) trades at around $0.97 per share, representing a roughly 99% decline from its five-year high of $145 per share reached on July 1, 2010. The company’s share price decline is justified. The National Bank of Greece has only been profitable once in the past five years. Companies that cannot stand on their own two feet without government help represent a risky and speculative bet.
Investors may want to look into RevenueShares Global Growth ETF and Cambria Global Value ETF. These two exchange traded funds suffer as a result of Greek exposure in their portfolios but invest the majority of their portfolios elsewhere.