Whenever we try to explain our industry to the uninitiated (usually with copious references to the movie Trading Places), we usually get asked some variation of “So if I buy a corn contract, will a truck full of corn show up at my door one day?”
We have to explain that, no, trading futures contracts doesn’t necessarily mean taking possession of the underlying commodity – but we bet that’s probably similar to what the folks over at Elliott Management’s NML Capital thought when they bought Argentine government bonds at bargain-basement prices back in 2001. They’ve been fighting Argentina for their full claim ever since the government defaulted on its debt obligations, but now they’ve wound up with a rather unusual bit of collateral on their hands:
An Argentina naval vessel impounded at a hedge fund’s behest still can’t leave Ghana, but most of its crew can.
Most of the 326 people aboard the Argentine navy’s flagship, the ARA Libertad, are to leave the ship and the West African country, where they have been stuck since the beginning of the month. Argentina has chartered an Air France flight to bring some 281 crew members, primarily navy cadets, back to Argentina, choosing the French carrier reportedly because it feared its own planes could be seized themselves upon arrival in Ghana.
The Libertad will remain in the hands of a skeleton crew and its captain and Argentina seeks to win its release while refusing to give in to Elliott Management, which won the seizure through an affiliate.
For what it’s worth, it appears to be a pretty nice boat, but it’s definitely not what NML capital was hoping for. In this case, they’re really just holding the boat hostage in hopes of getting some of the money they hoped to make on the trade, but it got us thinking… what would happen if some of the big traders in the futures markets woke up one day to find that they had come into possession of the underlying commodities that their contracts represented?
Just imagine rolling out of bed one morning to find you had accidentally taken delivery on your corn contracts:
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