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The Morning Brief: Hungary, Cyprus Draw Short and Long Bets; Brevan Howard Upbeat on Macro Investing

Brevan Howard is off to its best start since 2009. The firm predicts that 2013 should be a strong one for macro investing. Its BH Macro Ltd. was up 4.32 through mid-March, exceeding gains for all of 2012 and 2010. BH Macro Ltd. is a closed-end fund that invests all its assets in the ordinary shares of the $27.8 billion Brevan Howard Master Fund, a global macro hedge fund. In its annual letter to investors in January, the firm said “The Master Fund’s positioning as we start the year has a ‘risk on’ tilt,” code for 'it's okay to take on more risk.'

Hungary is the latest target of short sellers. Several managers are said to be betting against the country’s sovereign bonds. Hungary is reportedly Central Europe’s most indebted nation; its economy shrank by 2.7 percent in the fourth quarter year-on-year.

On the other hand, Cyprus’ debt is attracting long bets. According to one report, the price of one of its sovereign bonds, which is scheduled to mature in a little more than two months, suggests investors expect creditors will be paid in full even as the country awaits confirmation of a bailout.

A major hedge fund run by Fortress Investment Group is betting on the Japanese yen falling even further. The fund is banking on the central bank accelerating its policy of monetary easing. “We expect an expansion in the size, pace and duration of [Japanese government bond] purchases to be announced in April in the context of the [Bank of Japan’s] current open-ended asset purchase program, with the new purchases starting immediately,” fund managers Michael Novogratz and Adam Levinson reportedly wrote in an investor letter.

Jeff Ubben’s ValueAct Capital recently sold about 580,000 shares of CR Bard, reducing its stake to 4.5 percent of the maker of medical products.

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