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GREK: Greece Summons Hercules

Philip MacKellar profile picture
Philip MacKellar


  • GREK follows one of the most undervalued markets globally.
  • There are significant risks associated with the country, including high government debt, a broken banking system, and shouldering the brunt of migration into Europe.
  • Greece calls on Hercules to address non-performing loans.
  • ETFs may carry certain risks that investors should consider carefully.
  • GREK is undervalued but speculative, and its weighting in Contra’s portfolio is low.


The Global X MSCI Greece ETF (NYSEARCA:GREK) tracks a basket of equities listed in Athens. It seeks to mirror the performance of the MSCI All Greece Select 25/50 Index and has been listed since 2011. According to the latest fact sheet, the three largest sectors in the ETF are financials, energy, and consumer discretionary, at 30.7%, 16.9%, and 16.5% respectively.

Source: Global X MSCI Greece ETF Factsheet as of June 30, 2019

The five largest individual securities in the ETF include Hellenic Telecom (OTCPK:HLTOY), Alpha Bank (OTCPK:ALBKY) EuroBank Ergasias (OTCPK:EGFEY), OPAP, and National Bank of Greece (OTCPK:NBGIF).

Source: Globalxetf.com GREK overview

Here at Contra the Heard Investment Newsletter, the Vice President’s Portfolio purchased GREK in late 2015 at an average price of $9.31. Since then the price has bounced all over the place, and the valuations have remained low. The current weighting is approximately 2.3%, representing a small sliver of the overall portfolio.

GREK’s Investment Thesis: Contrary, Unloved, & Undervalued:

According to StarCapital, Greece is one of the five most undervalued stock markets in the world; the other countries rounding out the unloved list are Russia, Turkey, Italy, and Israel.

Source: StarCapital’s September 30, 2018 Global Stock Market Valuation Table

These nations don’t exactly inspire confidence. Imagine a financial advisor enthusiastically calling a client and exclaiming, “I’ve invested your hard-earned money in five super-cheap international ETFs: the Global X Greece ETF, the iShares Israel ETF (NYSEARCA:EIS), the iShares Turkey ETF (NASDAQ:TUR), the iShares Italy ETF (NYSEARCA:EWI), and the VanEck Vectors Russia ETF (NYSEARCA:RSX).”

What would the client’s reaction be? “You’re fired!” comes to mind as a possible outcome, as does a long period of silence due to a heart attack. Whatever the details, it probably wouldn’t be good. This hits on a major psychological issue associated with value investing. Buying cheap securities is uncomfortable and lonely. No

This article was written by

Philip MacKellar profile picture
Philip MacKellar is an analyst, portfolio manager, and investor at Contra the Heard Investment Newsletter. He has been with the company since 2011 and has been investing since 2004. The newsletter’s primary focus is on contrarian and value-oriented investment opportunities traded in the United States and Canada. In addition, Philip sometimes engages in M&A, other special situations, and holds bonds, preferred shares, and convertible securities. Contra the Heard is a Toronto based company and was founded in 1995. Philip also blogs about personal finance topics on his own website called mymoneymoves.ca in his free time. You can also follow Philip at the Globe & Mail, on Twitter @Rallekcam, and catch him on YouTube at Contra the Heard.

Analyst’s Disclosure: I am/we are long GREK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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